Good afternoon, everybody, and thank you for those of you that came. For those of you on the webcast, there are plenty of good seats still available. There was a great hot buffet lunch. You really missed out if you didn't trek on down here. We do appreciate those of you that came on down, and we appreciate everybody on the webcast. Good afternoon, and thank you for joining us for our 2018 Investor Day. Before I get started, I just wanted to say how honored I am to be the CEO of American Express. Leading this great company and following Ken Chenault is a tremendous responsibility, and it's one that I accept with humility, determination, and total commitment. Let me turn to what I hope to accomplish today. There are three major points that I hope you'll take away from our presentations.
First, we have a differentiated business model, and that positions us to win in the highly competitive payments industry. Second, there is a long runway for growth in the payments industry. Third, we'll build on our existing strengths by focusing our investments on four strategic priorities that extend across our businesses for growth. Here's our agenda for the afternoon. I'll give you a brief overview of where we are in our overall strategy for continuing our momentum. We'll hear more detail about the growth strategies we're pursuing in each of our three global businesses. Doug Buckminster will cover consumer, Paul Abbott will cover commercial, and Anré Williams will cover merchant and network services. Those of you who have followed us for a while know Doug and Anré, but you may not know Paul.
Paul is our Chief Commercial Officer who is responsible for all marketing, sales, and account management activities in our global commercial business. He's based in London and has been with American Express for 22 years, and in commercial services for the past two and a half years. Prior to that, Paul had senior roles in our global network and merchant businesses, he has experience across several of our key businesses. I've asked Paul to provide the commercial overview today as we are in the process of a search for the new head of the business. After the business strategy presentations, Jeff will come up and give you a financial outlook, and we'll finish the afternoon with a Q&A. We'll be taking a short break between the commercial and merchant presentations to give you an opportunity to stretch your legs.
Before I get into my presentation, I wanted to give you a little bit of background about me. For many, if not most of you, the only American Express CEO you've ever known is Ken Chenault. I've been with American Express for most of my career, 32 years in fact, starting with the travelers check group in 1985. Over my career, I've had an opportunity to run two of the company's major business lines, the merchant business and commercial services. I also ran our corporate travel business and was responsible for the global business travel joint venture we created a few years ago. I have served as the company's Chief Information Officer and led our global shared services functions, which include customer servicing, credit administration, business services, and technology. Over the past few years, I have been involved in the company's major realignments and restructuring activities.
I worked with Ken Chenault on overall company strategy as we navigated through a period of significant transformation. Since the announcement in October 2017 of Ken Chenault's retirement and my designation as CEO, through my assumption of CEO on February 1st, I've worked closely with Ken Chenault and the board to make sure a smooth and seamless leadership transition, and I focused on building our business momentum as we entered 2018. I also want to spend a minute talking about my direct report team. I think this is easily the best, most qualified leadership team in the industry. It's well-balanced between those who are long tenured at American Express and those who are more recent members. In fact, half of the team has spent the bulk of their professional careers at American Express, including Doug, Anré, Denise Pickett, Mike O'Neill, and Elizabeth Rutledge, and across many businesses.
Over the past decade, we've also been fortunate to bring in some very talented people from outside the company who have a wide range of experiences, including Jeff, Laureen Seeger, Paul Fabara, Mark Gordon, and Kevin Cox. I think that the combination of internal and external talent is critical because it provides different perspectives and different ideas, which are important for keeping a competitive edge. I would also point out that we have a deep bench. The leaders below these people are extremely strong. Some have grown up at American Express and others have been recruited from the outside. Our strong brand and reputation attracts talented people at all levels and from all backgrounds. We view ourselves as a leadership training ground, demonstrated by the fact that we have populated the industry with a number of our alumni who are in very senior positions with other institutions.
Many of our best people have decided to stay and build great careers here. We're very proud of our legacy of developing great leaders. Having a strong and diverse leadership team is important as we operate in an ever-changing environment. Today, we have a more positive global macroeconomic environment than we've had in a while, which is contributing to increased consumer confidence and better corporate earnings. However, we're well aware that the economy runs in cycles, and as we think about credit in particular, we always look to manage our credit exposure through the cycle. Customer needs are evolving, and how they interact with each other and who they choose to do business with are ever-changing. The ubiquity of mobile devices is driving much of this phenomenon. Technology disruption is part of our environment.
Whether it's blockchain or any number of fintech companies that are innovating key elements of the payments and commerce space, we've seen technology affect a number of industries, and we are paying close attention to potential disruptions in the payments industry. In fact, we look at technology disruption as an opportunity. Established companies like American Express have scale, recognizable brands, and strong balance sheets. This can be an advantage if you can leverage these assets while embracing the opportunities that emerging technologies provide. The growing importance of data is front and center today, and we'll talk more about the role data plays in our business model as we move forward. This has been and will continue to be an important asset for us. Obviously, we're constantly on guard about the competition, and it's no secret that it's been intense for some time.
We see it at different levels across all of our businesses and geographies. Networks are displacing cash, and I view this as a positive development. WeChat, Alipay, Zelle, we're seeing more and more entrants in this space, and this trend will only continue as consumers and businesses get even more confident doing business electronically. Finally, the regulatory environment in which we operate is constantly changing, and it's prompting us to make changes in our business in many parts of the world, including Europe and Australia. Against that landscape, I believe we are starting 2018 from a position of strength. We had record billings last year of over $1.1 trillion. We had adjusted revenue growth of over 8%. We have reset our cost base and successfully took out over $1 billion. This success, combined with revenue growth, enabled us to invest back into our business.
We announced some key co-brand deals with Hilton and Marriott, and we were honored to win the 2017 J.D. Power Award in their annual credit card satisfaction survey for the ninth time. All in all, we've generated a lot of momentum that we'll build on in 2018 and beyond. Two years ago, we established a game plan that focused on three objectives: accelerating revenue growth, resetting our cost base, and optimizing investments. In connection with those strategic objectives, we set the financial goals you see on the right, and we overachieved on those goals, delivering strong earnings and exiting Q4 with 9% FX-adjusted revenue growth. Now let me turn to the reasons why we believe we can continue our momentum. First, I want to talk about what sets us apart from our competitors, and that's our differentiated business model.
For many years, we have talked about our differentiated business model, focusing primarily on the closed-loop advantage and the data that it provides us. The data advantage is real and significant, and we will continue to rely on it to grow our business. Just focusing on the closed-loop misses the bigger story. The fact is that there are several components to our business model that makes us different from our competitors: our customer mix and geographic diversity, our revenue mix, our integrated payments platform, our ability to generate steady operating leverage as we grow, and our world-class brand and service. I'll speak to each of these components directly because understanding what drives our differentiated model is essential to understanding how we intend to win in the future. Our first differentiator is the diverse mix of customers that we serve and the scope of our geographic footprint.
We operate in over 130 countries globally. 43% of our billings are from consumers, 40% from commercial clients, and 17% from network services partners. While we have 65% of our billings from the U.S., 35% of our billings are from international, with our highest growth rates coming from outside the U.S. The second key differentiator is our ability to generate an attractive mix of revenues. As you can see on this slide, 75% of our overall revenues still come from spending and fees. We're much more reliant on spending and fee revenue than our peers, who rely primarily on interest derived from credit products. A key to continued revenue growth is our ongoing efforts to expand our merchant base so that we can meet more of our customers' spending and lending needs.
As Anré will talk about later, we're making some conscious trade-offs in the discount rate as we continue our focus on growing merchant coverage. The result, more places for our card members to use our products, which means more revenues from both spending and lending. The third key differentiator, and perhaps the most important, is our end-to-end integrated payments platform. When we look at successful new global business models, integrated models that easily enable commerce partners to plug into their platforms, like WeChat and Alipay, have shown that they can have success. This has been an important but not well-understood part of what has and continues to make American Express different. As an end-to-end integrated payments platform, we have relationships with all players in the commerce path, and we perform all aspects of the payments process between them with no middlemen.
We operate our integrated platform at scale globally with millions of card members and merchants. Because we have end-to-end relationships, we own all the economics on a transaction. This enables us to maximize value from our business, drive the spend/lend revenue mix I discussed earlier, and meet our customers' evolving needs. Additionally, because we have direct relationships with buyers and sellers, we have the flexibility to price and structure transactions to meet buyer and supplier needs, which is especially important in the B2B space. Our ultimate objective is to facilitate commerce between all parties connected to our platform, including our business partners.
There are many examples of how we connect partners seamlessly with our platform, including enabling pay with points with our merchant partners, facilitating authorization and settlement with processors like Square and Stripe, extending the platform into travel services with American Express leisure and business travel, and integrating into the commerce path of our co-brand partners. We continue to expand the relationships connected to our end-to-end integrated platform, we will continue to increase the volume of transactions on our network, which will drive even more scale and more revenue. An integrated platform serving a diverse customer base that spends at scale, combined with millions of merchants we have relationships with globally, gives us vast amounts of data. By putting that data to work, we have best-in-class fraud rates.
We get insights from our data analytics that we use to deepen relationships with customers and to help our merchants do more business. Our partners benefit as well as we allow them to plug into our network to take advantage of the analytics our platform creates. The data from our integrated platform powers our dynamic underwriting capabilities, which creates our no-preset spending limit. We're the only payments company that has a no-preset spending limit capability at scale, and that creates spend capacity for our customers. The data we derive from our integrated platform, coupled with our risk modeling expertise, enables us to approve individual transactions and deliver more spending flexibility than our competitors for consumers and/or for small and medium-sized businesses. In fact, we estimate our U.S. consumer charge card members spend five times as much on their American Express cards as they do on competitor cards they carry.
We can give our U.S. small business customers 3 times the spending capacity as our competitors with the appropriate credit discipline in place. Our business model provides benefits on the expense side of the equation as well. As you know, we run a global consumer, commercial, merchant, and network business, which no one else does. By organizing our businesses globally along customer segments and creating centers of excellence to serve all of these businesses, we use our scale to generate steady operating leverage as we grow. As you can see on the left, over the last 8 years, our adjusted OpEx grew by only 4% while our billings grew by over 50%. Additionally, we have redirected dollars into investments to build our business for the future. We have a long history of managing our expense base prudently and an operating model that gives us greater flexibility.
Because we are much less reliant on bricks-and-mortar infrastructure compared to many of our largest competitors, we can be more nimble and flexible in adjusting our cost base to fuel investment spending as we continue the shift to digital. Our brand has always been one of our greatest and most important assets. We've evolved our brand messages over the decades to address new customers and their growing range of interests. Next month, we'll be launching a new communications platform, which includes a new advertising campaign that builds on the brand's traditional strengths of trust, service, and security. In a new, more modern, and more comprehensive way that reflects the unique nature of our differentiated business model. This is the first time that we've launched a campaign that speaks to all the customer segments we serve with a single overarching message. This new communications platform will be global.
It'll be used for both our consumer and business segments, and it will drive home what our brand is all about, building enduring relationships with our customers. Underpinning our entire business is our heritage and ongoing commitment to service excellence, which is unrivaled in the industry. Hopefully, what I've been able to highlight is that our business model is very different than Visa and Mastercard. It's different than the PayPal model, and it's different than our card-issuing and merchant-acquiring competitors. What makes us different is not just one of these elements, it's the combination of all of these elements working together to drive customer and shareholder value. This is what makes us different.
The diversity of our customer base, our geographic footprint, our revenue mix, our integrated payments platform that includes end-to-end relationships, data, and economic value, our ability to generate steady operating leverage as we grow, and a world-class brand and service which symbolizes a standard that I believe defines this category. We are convinced that our model drives results that remain the envy of the industry. In fact, the average annual card spending powered by this model is three to four times that of the competition, and the revenue mix this model generates is extremely attractive. To sum up, our differentiated business model has been instrumental to our competitive advantage, and we believe it will be increasingly important in our future. I want to briefly touch on the opportunity that we'll put that model to work against. The opportunity in the payment space is robust across all segments globally.
On a consolidated basis, the global opportunity in payments continues to grow, both from a consumer and commercial perspective, as cash and checks continue to decline as preferred payment methods. According to industry analysts, the global opportunity for card spending is approximately $29 trillion for consumer cards and $19 trillion for commercial cards. While the overall opportunity for commercial cards is smaller, it is as large as it is for consumer at approximately $17 trillion because it is far less penetrated. Overall spending on consumer cards is expected to grow by a 10% CAGR from 2016 to 2021. At the same time, actual penetration was at 42% in 2016, and it's projected to grow to 54% by 2021.
If you look at consumer card penetration by region, there are huge opportunities to continue to expand spending in most areas of the world, as the only countries today that have over 50% penetration are the U.S. and Canada. On the commercial side, non-cash commercial transactions are expected to grow 6.5% CAGR from 2015 to 2020. We expect healthy growth across all regions. That's a high-level view of the opportunity. Now I want to talk about how we're going to take advantage of our differentiated business model to capture our share of growth opportunities going forward. With this much opportunity, there is a long list of places where we can act, but we will stay focused on a core set of strategic imperatives that will drive our future growth.
In doing so, we will build on our core strengths while looking to innovate and to expand into the appropriate adjacent areas that will further our growth. The four strategic imperatives are strengthening our leadership in the premium consumer segment, extending our leadership in commercial payments, strengthening our global network to provide unique value to all our constituents, consumers, business clients, merchants, and partners, and playing a more essential role in the digital lives of consumers. Doug, Paul, and Anré will elaborate on specific strategies and tactics in each of these areas. To give you a sense of where we are and where we want to be overall, I'll provide a high-level view of these four areas individually. First, consumer. Today, we are the leading consumer card issuer globally by volume. We have a high-spending, high-margin global customer base.
We have a diverse range of flagship products and services and a distinguished brand. You'll hear from Doug, in order to meet the evolving needs of our current customers and to attract new customers to our franchise, we're going to focus more on the overall experiences we provide so that we can build loyal relationships that last a lifetime. We plan to deliver membership benefits that span multiple aspects of our customers' everyday spending, travel, and lifestyle needs. We'll deliver a range of experiences that attract high-spending customers across all generations. To meet the digital generation where they are, we'll bring more mobile and digital capabilities to our overall offerings. Turning to commercial. We have a very strong position to build on. Today, we're the number one commercial card issuer globally. We have relationships with over 60% of the Fortune Global 500.
We're the number one small business issuer in the U.S. In international, our SME billings grew 17% in 2017. While we are the leading small business issuer in most countries outside the U.S., we have a large opportunity for growth as we currently have relationships with less than 5% of all SMEs in our eight lead countries overall. What you'll hear from Paul is that going forward, we want to become the leader in B2B payments across all commercial segments. We will do this by building on our relationships with 60% of the Fortune 500 and leveraging other components of the integrated payments platform, such as small business customers and merchants who are their suppliers. Additionally, we want to become the working capital provider for our existing small and mid-market customers globally through the payment products to meet their intermediate and short-term financing needs.
Of course, to achieve our aspirations in our consumer and commercial businesses, we need to continuously evolve our core offerings and bring new and innovative products and services to market. As you will hear from Doug and Paul, that is already well underway. They will tell you more about the results we're seeing in our Platinum portfolio, where we had our best year ever from a billings perspective, acquisition perspective, and retention perspective. These results speak to the continued strength and relevance of our brand across both our consumer and our commercial business. We also launched a brand-new suite of Hilton cards for both consumer and small business owners. In Canada, we launched a new Cobalt Card targeted specifically for millennials that is off to a great start. On the commercial front, we're launching more flexible, short-term, non-card working capital solutions for small and mid-sized businesses.
We're expanding our merchant financing, and we're building out our cross-border financing solutions. In addition to new products, our strategy for growing both our consumer and commercial franchises will rely on making our existing customers a platform for growth. Not only will we look to take advantage of the growth opportunities within each customer segment, but by leveraging the relationships that are created by our integrated platform, we will take advantage of the relationship across customer segments where we have a significant opportunity. Today, for example, over 70% of our SME customers have only one American Express business product, even though we have a whole suite of products to help them manage and grow their companies. Also, less than 40% of our U.S. small business customers have a consumer relationship with us.
Additionally, our share of our U.S. consumers' customers' lending business is about half of our share of their spending. We are confident these numbers will grow. We intend to use big data analytics and our marketing capabilities to get the right additional products to the right customers. As you can see, we have terrific opportunities to connect and engage more with our current customers to grow our business. Our third strategic priority is to strengthen our global network to provide unique value to all parties, consumers, businesses, merchants, and partners. Looking at where we are, we have strong coverage in the U.S. and more targeted coverage outside the U.S. Our bank partnerships have been centered on generating issuing revenues where they operate. We've got a network infrastructure that meets our customer needs today.
In terms of where we're going, as you know, we're focused on achieving parity coverage in the U.S. and on improving coverage to support our consumer and business customers internationally. We're leveraging bank partnerships to continue to acquire new customers and increase coverage. As the payment industry continues to evolve with more types of transactions being processed electronically, such as cross-border payments and other non-card transactions, we need to ensure that our network can process many different types of transactions in addition to traditional card transactions. As a result, we will continue to invest in our network so that we can process additional payment transaction types, as well as increase the network's flexibility and agility so that we can offer unique benefits to our customers and provide greater capabilities to our business partners.
As we invest in our network, it will strengthen our ability to bring continuous innovation to those who use it. For example, we've been using our network to significantly expand our digital offers and pay with points capabilities over the past several years. We've also launched Apple Pay, Google Pay, and our own version of those capabilities, Amex Pay, in a number of regions around the world. We'll continue to innovate here, including adding more capabilities that enable our business partners to easily and securely plug into our network to provide unique value to our mutual customers while respecting customer preference and protecting card member and merchant data. Turning to our fourth strategic priority, we will strive to make American Express a more essential part of our customers' digital lives. This priority cuts across all our businesses: consumer, commercial, and network, and it's global in scope.
We already have a growing audience of customers who interact with us digitally. We're providing more digital servicing options and doing more of our marketing via digital channels. While our digital audience is growing, engagement is modest to date, and it tends to be transactional in nature. Going forward, our goal is to make our mobile experience serve as the hub for membership for all of our card members and to expand our digital solutions for our merchants. Our app will move from being a functional way to pay your bill and be seen as a robust and essential travel and lifestyle companion. We will do that organically, through acquisitions, as well as to continue to launch partnerships with digital innovators. By doing these things, I believe we will make American Express a more essential part of our customers' lives.
That's a quick overview of where we are in our four strategic priorities for growth. What does it all add up to from a shareholder perspective? It really comes together in a simple financial model. We have a diverse and growing set of businesses. We have attractive opportunities for growth, and we are committed to innovating in all of our businesses to increase both spending and lending. We use our expense base to generate steady operating leverage as we grow, and we have significant capital strength. Putting these elements together thoughtfully and effectively will better position us to deliver the kind of steady and consistent EPS growth that our shareholders have come to expect from American Express. Looking at 2018, we expect this financial model to deliver growth across both the top and bottom line.
We expect to deliver strong revenue growth and earnings per share growth between $6.90 and $7.30. Let me come back to where I started. What I hope I've shown you today is that we have a differentiated business model, which has been instrumental in our competitive advantage and which we believe will become increasingly important in the future. The payments industry is expanding and offers rich and broad set of growth opportunities for us. We will build on our existing strengths by focusing on our investments on four strategic priorities that extend across our businesses to drive growth. Next, we'll talk about how our three businesses leverage our differentiated business model to take advantage of those opportunities for growth. Let me now ask Doug Buckminster, sir, to come up and talk about our global consumer services business.
Thank you, Steve. Good afternoon, everyone. 2017 was a tremendous year for the global consumer business. A focused set of investments and disciplined execution built broad global momentum, and this momentum was evident in customer acquisition, billings, and loan growth. This volume growth translated to strong top-line acceleration. This acceleration was due in part to our focus on increasing the productivity and efficiency of our investments and expense base. The growth momentum also benefited from an intensified focus on experience-based innovation that differentiates membership, that defines our brand, and that fuels growth. Let's look at a few of the numbers. The numbers I'll show throughout this presentation are proprietary consumer issuing only. Anré Williams will cover the network services business. In 2017, we saw strong and accelerating momentum in billed business acquired, that's billings from new customers, as well as total billings and loans.
That together are translating to best-in-industry revenue growth rates. In Q4, we achieved an exiting growth rate on revenue of 12%, no adjustments required. We also enjoyed this considerable strength across geographies. We saw strong performance accelerating throughout the year in our U.S. consumer and international segments. In the U.S., we gained share of loans and revenue, but we did not hold billing share. This is a 2018 focus area for us. In international, very strong share gaining volume growth translated to 8% revenue growth. The gap between the volume growth and revenue growth is explained in part by discount rates, adjusting to regulation in Europe and Australia, as well as comparatively lower levels of net interest income outside the United States. We are experiencing a breadth of strength in international that is unprecedented in my 30 years.
All our major countries, with the exception of Canada, are growing in double digits, and Canada has recovered from the loss of a co-brand portfolio and is poised to resume share-taking levels of growth. International consumer accelerated to 14% billings growth in total in Q4 and is now taking share in nearly all major countries. This growth is the result of country-level plans that bring an enterprise view that complements our global line of business structure. These plans include how we flex our model in response to regulation in areas like Europe and Australia. It also reflects our ability to move investments to where the greatest opportunities are and our commitment to build once for many in areas like digital product, benefits and services, and technology platforms. Finally, we have the most talented, creative and disciplined leadership at country level than we've had in my 30 years.
A focused set of priorities and disciplined execution have produced this strong momentum, we'll retain this focus, with the luxury of shifting more investment and mind share towards innovation. With the rest of my time, I'll move through five focus areas that build on our differentiated business model. First, innovation based on experiential value, driving growth by better serving the needs of our 50 million consumer members, building our lending business while managing volatility, capitalizing on our strong global co-brand roster while bringing our differentiated capabilities and assets to bear, retaining a relentless focus on driving efficiency and productivity from our marketing spend and expense base, all of these areas powered by the accelerating digitization of the customer experience. Let's start with our efforts to differentiate membership through improved experience. I'll highlight three innovations today.
The relaunch of our iconic U.S. Platinum product, which was about to begin when we sat here this time last year. Ask Amex, a mobile travel and concierge pilot that we introduced last year, Pay It Plan It, a new service introduced in Q4 to 18 million U.S. lending customers. Last year at this meeting, I introduced the new Platinum value proposition, I noted that it was a powerful example of our commitment to compete based on rich experiential value, in addition to commodity elements of price and rewards. We also decided that we would price for the incremental value we put in this product, raising membership fees from $450 to $550 in the face of intense competition. How did we do? Bottom line, we did a really good job of better serving our customers' travel and lifestyle needs.
Calls to our travel and lifestyle unit, as well as global lounge visits, increased significantly. 50% of customers enrolled in the new Uber benefit, 290,000 customers reached out to us and proactively requested early access to the new stainless steel credentials. These are impressive indications of member engagement, they also demonstrate the appeal of the new value enhancements. This value infusion resulted in record new acquisitions, all at the $550 price point, nearly half of these new customers were less than 35 years of age. Strong evidence of generational relevance at the very top of our product line. Billings volume bounced back from low to mid-single digit growth in 2016 and exited in the high teens. Voluntary attrition remained at low levels despite fierce competition and a fee increase.
This is an example of us playing offense, not defense, it's also a clear demonstration of our ability to create differentiated value, communicate that value effectively, and price for it. We are focused on ensuring relevance to a new generation of members, Pay It Plan It was founded on insight around this generation's desire for financial control and a preference to exercise that control via a mobile interface. We tapped into that unmet need with Pay It Plan It, a new service now available to 18 million U.S. lending customers. A simple, intuitive experience that's the product of intensive research and a complex tech build. It's a feature whose use and appeal can best be described with a short video. For those of you following along via webcast, please click on the link to the left of the slides titled Pay It Plan It.
Cappuccino? June has been a crazy expensive month. I am in three weddings. I had to buy two nice dresses. You have got to be kidding me. For putting me in this dress, she is getting napkin rings. Plus, I have had the usual expenses like yoga, dry cleaning, and meals. Every week, I use the new Pay It feature of my American Express card to control my balance before it turns into debt mountain. See you next month. Bye-bye. Done. I have everything under control until suddenly my dream chair goes on sale. My first thought, no way am I buying this right now. I remember with my American Express card, I can Plan It. I choose the payment plan for the chair that is right for me. There are no hidden fees or interest to calculate. I know exactly how much I will be paying each month.
Six is just right. I can get what I need and stay in control of my finances. Thanks to Pay It and Plan It, I can even handle a crazy month like June.
We are at the beginning of this journey, but early signs are encouraging. Pay It is being used for small, everyday transactions of around $30 on average. Think coffee shops, convenience stores. While Plan It is being used to structure larger transactions, typically around $600, predominantly in travel and retail categories. We are hitting our design target with millennials three times as likely to use this feature as other customers. Planners, 40% of planners, those are folks that turn a transaction into an installment plan, have not historically borrowed from us. We think we are onto something. Platform innovations like Pay It, Plan It cut across products and can spawn additional innovations. In 2018, we will tune the user experience, we will dial up marketing, we will test pricing and terms, we will leverage this feature as a differentiator in new customer acquisition, and we will explore merchant integration.
Think about merchants being able to offer 0% for six months on selected products or customer segments. In Global Consumer, we are on a quest to mobilize membership. That is to bring all the services and support of American Express membership to the mobile device. In 2017, we piloted Ask Amex, a chat-based travel and concierge service, and we were surprised by the results we saw. The pilot revealed substantial demand from our member base with high engagement from millennials and usage concentrated in two of our core focus areas, travel and dining, all with high automation rates right out of the box. The positive results led us to make a couple of acquisitions. We acquired the company behind the app that powered Ask Amex, Mezi, and a U.K.-based company that specializes in dining advice and booking. In 2018, we will onboard those companies and their tech.
We'll integrate Amex unique content like the Global Dining Collection, Fine Hotels + Resorts, Preferred Airfare, and we will further train the AI to ensure efficiency and enhance the overall relevance of recommendations. Finally, we'll integrate all of this functionality into our mobile app. This will provide another servicing channel for Platinum and Centurion customers to tap into their travel and lifestyle service. It will also give us the opportunity to extend this service cost effectively deeper into our global member base. Our model has long been predicated on a large, high-spending, high-margin member base that's deeply engaged with our products and services. That's our proposition to shareholders, merchants, and partners alike. We're focused on strengthening the engagement levels of our 50 million members. Existing customers have long been driving the majority of our loan growth, and in 2017 contributed 11 percentage points to overall loan growth.
On the spend side, we have higher share of wallet, but it struggled with growth in wallet share over the last couple of years. Our focus on this metric began to pay off in 2017 when organic growth contributed two percentage points on a full year basis and three percentage points on exit to overall billings growth. As I showed last year, we have a track record of retaining greater than 97% of our billings base from year to year. 2017 extended that track record. Customers who left the franchise for voluntary or credit reasons accounted for less than 2% of previous year billings. One key to better serving and engaging our members is increased adoption of our mobile app. We're doing a great job growing our app active base with growth rates of around 35% over the last several years.
We're benefiting here from tech adoption trends across our base as well as the demographics of new customers. But we still have a significant opportunity to improve the frequency of visit, to move from transactional to relational in our mobile service provision. We think Ask Amex and Pay It, Plan It are examples of the type of content that will help move us in that direction. In terms of demographics, maintaining generational relevance dictates a move to mobile membership. We're seeing increases in app adoption across our global new customer base, but it's especially pronounced among millennials, with two-thirds of new customers app active within the first three months. A powerful demonstration of advocacy and of our customers functioning as a platform for growth is the development of our member referral program.
Pioneered in international, this program allows members to recommend a relative, friend, or colleague for Amex membership. This volume has tripled over the last two years and accounts for greater than 10% of all consumer acquisition volume. It's high-spending, high-margin, high-credit quality volume. This program is especially popular with younger members, with 54% of all referral volume coming from millennials. As you can see, driving increased engagement is not just about moving marketing dollars around. We've improved product value in areas like Platinum and the new co-brands. We've introduced, we're expanding services such as Ask Amex, term loans, and our Global Lounge Collection. We're broadening our channel reach in digital and voice. Finally, we're enhancing relevance through data-driven personalization and a major focus on merchant acceptance. We're gaining traction, and we have a long runway for growth from within our expanding customer base.
We've spoken over the last two years about the customer and competitive imperative to better meet our members' borrowing needs. I'll provide an update on our progress, as well as describe how we're positioning ourselves to compete effectively throughout the cycle. As you can see, we've ramped up loan growth in the U.S. over the last two years, and we've also seen international loan growth, which is a smaller portion of total loans, grow strongly in 2017. The 12% growth rates that we put up are approximately 2x the U.S. industry growth rate. It's important to note that this acceleration has primarily been driven by growth from tenured customers. In 2017, tenured customers contributed 59% of total loan growth, up from 39% just two years earlier. We like this shift. It's evidence of us deepening and better meeting our customers' needs.
It also produces more cost-effective, lower volatility growth that has a shorter time to revenue than prospect-driven growth. While we've seen write-offs increase modestly off record lows in recent quarters, yields have more than offset this increase, leaving net credit margin at its highest point in a decade at 8.3%. While net credit margin is an important benchmark, total net revenue to losses is an important measure of margin and ability to absorb volatility. The chart on the right demonstrates that our premium customer base and diversified revenue mix produces a net revenue margin of 15% for our U.S. consumer business. Net revenue margin is simply total revenue less rewards divided by receivables. When you divide our net revenue margin by our loss rate, you get a loss coverage ratio of nine times. That compares favorably to an industry benchmark of 3.8 times.
If you were to calculate this ratio, not in the U.S. consumer business, but the global consumer business, we'd hit 10 times. If you were to include the revenues that global consumer spend drive in our merchant segment, you'd hit 11x. This substantial delta to industry norms is the result of us being a global, integrated premium provider. I've shown this slide the last couple of years to demonstrate that our portfolio is healthier with lower exposure to high volatility segments than it was on the eve of the last recession. 45% less subprime, 46% low tenure AR as a proportion of total receivables. This does not make us immune to cyclicality or macro shocks. No one here believes that. We do believe a lower volatility portfolio with stronger margins should allow us to compete effectively in the down leg of the cycle.
What should you expect from us in 2018? You should expect a lot of what you've seen from us in 2016 and 2017. A continued focus on existing customers, one that we'll execute by continuing to revitalize our product set to drive growth and positive credit selection. We'll continue to harvest growth from new innovations like term loans and Plan It, both of which are focused on existing members. We'll continue to price for risk and strengthen margins, we'll vigilantly monitor and recalibrate underwriting as stress emerges in certain segments. Finally, we'll invest to substantially elevate our risk and collections capabilities. Let's spend a few moments on our partnerships. 2017 was a very strong year for our co-brand portfolios and for our efforts in partnership renewal and expansion.
As you can see on this page, we grew volumes faster on partner portfolios than we did on the consumer business as a whole. This is true in the U.S. and internationally. We're proud of this. We believe it's evidence of our ability to bring distinctive capabilities to bear for the benefit of our partners and end customers alike. Our global reach, our travel and lifestyle assets, our servicing capabilities, and our integrated model make us a very compelling partner for travel and entertainment co-brands. We are focused on building on these distinctive capabilities. We have a lot happening with our partners. New points advance feature, and a new millennial product with Delta, new product introductions, and a portfolio conversion with Hilton as we move to become their sole issuing partner, new product introductions with Marriott and a range of other initiatives with our global partners.
These include a launch of a new co-brand product with Westpac, a top 4 bank in Australia. We're also very excited to innovate with partners on new capabilities like Plan It and Ask Amex. We think it's an opportunity to create unique value that is difficult to get elsewhere for our partners and our mutual customers. We are aware that industry competition and our commitment to maintaining a strong growth and return profile means getting more of our expense base and our marketing investments, not just this year, but every year. One key indicator to our competitiveness is our ability to scale new customer acquisition volumes and to do so at increased efficiency. It's not an easy task in a highly competitive industry. That said, this slide illustrates that we've been able to increase acquisition investment levels, the blue bars, by 20%, while improving the overall efficiency of those investments.
In 2017, we increased billings acquired by 18% while holding investments virtually flat. This is the direct result of improved products, partnerships, prospect targeting, and an application experience that has friction removed. This growth in new customer billings is the product of a 5% growth in new customers, coupled with a 13% increase in new customer average spend. These gains in efficiency and engagement were coupled with strong credit quality and bringing in 62% of customers on fee-based products. Evidence of our ability to engineer value into our products and to communicate that value effectively to prospective customers. A big part of our efficiency story in new customer acquisition is our investment in digital channels over the last few years. I showed a few slides ago that new customer billings are growing in the mid-teens. Digital channels are a growing slice of that growing pie.
Digital channels are a high-efficiency set of channels that are maintaining efficiency as they scale and as they displace less efficient channels. We acquire about $28 in billings per dollar invested in digital channels, compared to $20 in non-digital channels. A 40% yield improvement in digital channels. Continuous innovation is required to drive this volume shift and efficiency. The right-hand side of the page highlights one of those innovation areas. More applications are submitted from mobile phones than PCs and tablets combined. Making applications easier to complete through an improved user experience is key to maintaining efficiency. Our focus on a mobile-first application experience has yielded substantial improvements in completion rates over the last few years. In 2017 alone, completion rates on mobile increased by 9%. It sounds small, but against an investment base our size, it produces real leverage.
The majority of those applications are being completed by the newest generation of consumer. In 2017, millennials accounted for 36% of all new consumer acquisitions and 50% of mobile applicants. These customers show strong engagement as evidenced by average spend that's roughly on par with more established consumer segments. These customers also demonstrate a willingness to pay a fee for value and a propensity to apply and serve on mobile. We're working hard to build products and services that meet the needs of this generation and allow them to consume the value of membership on their device of choice. Another source of long-term efficiency is the trend towards self-service. We've seen an extended period of customer volume growth exceeding call volume growth. The left-hand chart shows the % of customers self-serving by age range, comparing quarter one of 2015 with last quarter.
What you see is not particularly surprising. You see self-serve rates increasing over time among all age ranges. This is the product of technology adoption trends, as well as our work to add functionality and improve the usability of our mobile product. You also see younger generations self-serving at much higher levels and increasing self-serve rates more quickly. The result is a 9 percentage point shift in self-serve rates over this time period. We did not force this or incent it. We simply enabled it, and we believe this is a long-term tailwind for our business, driven by demographics and channel choice of new customers with improved functionality and usability playing a key role. Finally, a wider deployment of chat backed up by AI to ensure efficiency and service quality will further accelerate this trend.
Overall, we believe we have a rich set of opportunities to drive efficiency in 2018 and beyond. New compelling co-brand and proprietary products will drive acquisition efficiency and unlock growth from existing customers. The shift to digital for marketing and servicing will continue to produce meaningful gains. Our continued focus on engaging existing customers and the growth of member referrals will drive marketing efficiency and customer loyalty. We end where we started. We've built strong, broad momentum that we will sustain with experience-focused innovation, leveraging the customer as a platform for growth, a continued focus on better meeting our members' borrowing needs while managing volatility, capitalizing on our strong global partnership portfolio, maintaining a relentless focus on efficiency and productivity, all fueled by the accelerating digitization of our business.
With that, let me introduce Paul Abbott to take you through commercial, and I'll see you in the Q&A.
Well, thank you, Doug, and good afternoon, everybody. Today, I'm going to talk about how we are extending our leadership position in commercial payments. Commercial payments continue to be a large and a growing part of American Express's overall business. There is a very long runway for growth in this business, particularly with small and mid-size companies. Our strategy is working. We have strong momentum from new customer acquisition and also from existing customer engagement. We are very confident that our commercial payments business will continue to be a strong growth engine for the company due to our global scale and our differentiated business model. I'd like to start today with a brief overview of the commercial payments business, our leadership position, and the strong momentum that we have built.
I'd like to focus on some of our competitive advantages as a business, how they differentiate us, and the strong platform for growth they create. As Steve mentioned earlier, American Express is the global leader across all commercial payment segments, from small to mid-size businesses to the largest global companies in the world. We serve 3.3 million businesses with 14 million card members, and we serve them in over 200 countries. In the U.S., we're the leading issuer of small business cards, and our small business card portfolio is actually larger than our five nearest competitors combined. Our corporate card is and has long been the industry leader, and we've established relationships with over 60% of the Global Fortune 500. Our commercial business is a significant driver of growth for American Express, and we delivered strong financial results in 2017.
Billings growth accelerated to 10%, and we delivered 40% of the company's total build business. The commercial business is much more spend-centric than the consumer business, with business loans only representing 16% of the company's total loans. That said, we continue to build good momentum in our lending business with 18% FX-adjusted growth in AR. Total revenue growth in 2017 was 7%. 90% of our commercial billings are actually on charge card products, with 10% on credit cards. Although we continue to maintain a leadership position in T&E, you will see here that two-thirds of our billings now come from customers' broader payments to their overall supplier base. This business-to-business spend typically represents larger, more recurring transactions, and importantly, it's growing at 11% CAGR since 2015, which is five times faster than T&E spend.
We manage our commercial business in three distinct segments: global and large clients, U.S. small and medium enterprises, and international small and medium enterprises. Here you'll see the billings distribution across those three segments. The global and large segment includes companies that generate over $300 million in revenues annually. This segment is now 25% of our billings and is growing at 5%. The global SME segment is now 75% of our global billings. It's growing at 10% in the U.S. and 17% in international. Our commercial strategy is rooted in the strategic objectives that we've set for each one of these three segments. For our global and large customers, we seek to maintain our position in T&E whilst becoming a leader in B2B payments.
In the U.S. SME segment, we're focused on driving growth through expanding B2B spend and business financing to become a leading working capital provider for our existing customers. In countries outside the United States, where business card payments are really under-penetrated, we have considerable potential to drive growth to acquiring more new customers. That's some context on our commercial business. Let's take a look at the growth opportunities we have. Total business spending globally represents a significant opportunity for us. Much of the spending done by companies today is still on checks and ACH. The global opportunity for commercial payments is estimated at $19 trillion. Our existing customer base is also a platform for growth.
71% of our existing SME customers around the world have just one commercial relationship with us, which creates a large opportunity for us to sell our broad range of B2B payment and business financing solutions. International expansion represents another attractive growth opportunity for us. Less than 5% of small to mid-size businesses in those top eight international countries combined have a commercial relationship with us, creating another significant runway for growth. American Express is already a global leader in commercial payments, and our business model creates some really important strategic advantages for us that position us for continued growth. I'd like to focus on three of these competitive advantages that are really powering the success of our business. First, our integrated payments platform. Second, our industry-leading product set, and third, the power of our global acquisition and customer engagement ecosystem.
As you heard from Steve, one of our most important advantages is our integrated payments platform. This creates access to richer data and insights. It creates a network of buyer and supplier relationships, and it creates real economic advantage for our customers. Let's take a deeper look at how these advantages play out in the commercial business. First of all, how are we capitalizing on our data and insights advantage? With access to buyer, supplier, and partner data, we utilize this information at scale to deliver unique insights and benchmarking for our customers. These powerful insights drive savings from policy compliance and improve terms with suppliers. Let me show you a couple of recent examples of how we use buyer and supplier data and benchmarking with our customers.
We identified for one of our global customers that they were paying 35% higher average daily rates for hotels booked in Midtown New York compared to their peers. We could see that their peers got better deals by consolidating spend with a couple of specific properties. We can provide clear, actionable recommendations on how they can save cost. In another example here, because we can track the exact time, the location, and the cost of each transaction, and we can benchmark that against customers in the same industry. For another one of our global customers, we could show them that their average employee spend on meals between 6:00 P.M. and midnight in Sydney was 73% higher than their peer group. We've also developed a suite of B2B insights using our own spend data, but also leveraging $5 trillion of customers' payable spend.
Using our benchmarking analysis, we helped a global publisher negotiate better payment terms with 50 large suppliers, helping them to extend the days payable outstanding by 5-10 days and improving their cash flow position by $10 million month-to-month. These are just a few examples of how our integrated payments platform and our global scale come together to create unrivaled transaction information. With data from over 60% of the Fortune Global 500 and millions of small businesses, our analytics and our recommendations have helped customers to realize significant savings on their travel spend, their entertainment spend, and their broader supplier spend. Another advantage of our integrated platform is our vast network of buyer and supplier relationships. Let me give you another example of how this works in B2B payments. Growing B2B payments requires creating value for the buyer and for the supplier.
We have direct relationships with the buyers and the suppliers, and we don't operate with a rigid interchange pricing model like multi-partner networks, we can work with the buyer and the supplier directly to agree pricing based on the value of a specific spend category or even the value of a specific transaction type. This pricing flexibility gives us a significant advantage in B2B payments, specifically for large and global customers that require more tailored, more flexible pricing. In addition, as a merchant acquirer, we also have our own dedicated teams that can go out and onboard B2B suppliers directly for our customers in a very targeted way. We also have the ability to sell our business products to our tens of millions of existing consumer card members and merchants around the world. The third advantage here generated by our integrated platform is economic value.
First of all, our commercial underwriting and no-preset spending limit capabilities enable us to offer higher spend capacity. As Steve mentioned earlier, for U.S. small businesses, on average, we're able to offer three times the spend capacity versus our competitors. Actually, if you look at the larger customers within the SME segment, we can offer 11 times the spending capacity versus our competitors, which is critical to effectively manage the higher spending needs of these B2B customers. Our integrated platform overall is optimized specifically for business customers. This greater spend capacity leads to our commercial customers generating two and a half times the average spend per basic card member versus consumer.
Finally, as a network and as an acquirer and as an issuer, we generate revenue from each of these three activities, which creates a larger profit pool that we can invest in higher value products for our business customers. In summary, our integrated platform delivers powerful data and insights, pricing flexibility, direct buyer and supplier relationships, a higher spend capacity, and an economic advantage. These combine to create a real competitive advantage in commercial payments. To compete effectively in commercial payments, you need a product set to meet a wide range of business spending and business financing needs. Today, we offer a diverse suite of products exclusively designed for businesses. Our foundation, of course, is based on our industry-leading charge and credit cards for small and mid-size businesses and our corporate card products and business travel accounts for larger companies.
We've also developed a range of supplier payment and business financing solutions, such as purchasing cards, buyer-initiated payments, virtual payments, cross-border payments, and short-term business financing. These are creating new growth opportunities for us. Let's now take a look at three product innovations that are driving growth in the commercial segment. First of all, the relaunch of our U.S. Business Platinum Card, second, Working Capital Terms, and lastly, cross-border payments. As an example of the power of our core products, we refreshed our U.S. Business Platinum Card in October of 2016. The new benefits include 5 times points on airlines and hotels booked on AmexTravel.com, 1.5 times Membership Rewards points for transactions above $5,000, and 35% more redemption value through an enhanced reload on certain air transactions.
Our objective here, to acquire more new customers and to capture more of our existing customers' supplier spend. Just as Doug shared in consumer, this strategy is also working in commercial. Last year, we saw a 21% increase in bill business growth in the U.S. Business Platinum portfolio, a 13% increase in the number of accounts since we refreshed the product, and an 11% reduction in our customer attrition rate. Importantly, though, we also saw a 26% growth in the number of transactions over $5,000, validating that our customers see tremendous value in these business-specific benefits. Given the success that we've seen here in the U.S., in 2018, we're going to refresh our Business Platinum product in a number of additional countries. While our commercial business is heavily spend-centric, we view business financing as an attractive adjacency for us, and we will continue to grow it judiciously.
Across the spectrum here that you see of financing for business customers, we are focused on short-term, purpose-driven, short-term working capital solutions. The risk profile of this segment is lower than longer-term business loans. Our overall objective here is to become the working capital partner for our small and mid-size customers, providing access to capital to help them and their businesses thrive. In 2016, we introduced Working Capital Terms for SMEs in the U.S. This is an innovative digital non-card financing solution that we offer to qualified existing customers. We offer up to $750,000 in short-term credit lines at competitive fees. Customers receive loan decisions within minutes from completing a quick and simple online application process. Payments can be made to any verified supplier, whether they're an American Express merchant or not, and the customer has the flexibility to pay in 30, 60, or 90 days.
Let's take a quick look at how it works. For those of you following along via the webcast, please click on the link to the left, which is titled Working Capital Terms.
What if you had a pause button for paying vendor invoices, one that makes sure your vendors get paid promptly while the money stays in your business bank account for up to 90 days? Welcome to Working Capital Terms from American Express. Here's the way it works. You enroll online, you get a decision in as little as 60 seconds. Enter your bank account information. Add your vendor and their information. We'll tell you how much you're eligible for. You're ready to request funds. When you get an invoice from your vendor, let us know how much you need based on the amount you're eligible for. Choose your term. You have a choice of 30, 60, or 90 days to repay with a low fee, whatever works best for you. We'll take it from there.
We'll pay vendor invoices within two business days via ACH, but it's clear the payment is coming from your business. To make paying us back easy, the funds and fee are auto-debited from your bank account at the end of the term. You enroll in the program once and then request funds whenever you need them. No collateral is required. As a valued American Express card member, we don't need to run a separate credit check when you enroll. Working Capital Terms from American Express. It's the simple way to put invoice payments on pause while your business keeps moving forward.
We believe that we are positioned to win here with a different approach, a different approach to the traditional banks and a different approach to online lenders. First of all, we have a large customer base to tap into. This has been one of the online lenders' biggest challenges. Without access to existing customers, they face higher acquisition costs. We offer a seamless online experience that delivers fast funding and is easy to use, as you just saw. This compares very favorably to traditional banks, whose application process can take on average over 25 hours to fulfill. Because we're only targeting our existing qualified customers, we have the spend data and we have the risk capabilities to better accommodate their borrowing needs and balance the risk.
In addition, we have a strong balance sheet, our cost of capital is lower than online lenders, enabling us to offer competitive fees. Of course, all of this is powered by our strong brand and our world-class service. International trade represents another significant opportunity for growth, and we believe it's ready for disruption. We are connecting the key elements for efficient global trade into a new differentiated value proposition. We're bringing together our foreign exchange services, our international payments network, and our working capital solutions to provide customers with a one-stop shop for international trade with more choice and more value. Customers can now choose to complete their international payment with us using the traditional ACH method or using their American Express product.
Using their American Express product gives customers the advantage of rewards and benefits as well as flexible payment terms, which, as you can imagine, is highly valued by companies importing goods from overseas. On top of that, we announced late last year that we started piloting the use of blockchain distributed ledger technology to execute faster international payments and reduce the costs and delays associated with the traditional funds transfer process. Faster international payments with rewards and flexible payment terms is exactly what our customers are asking us for. This diverse industry-leading product set that we've just reviewed is sold and serviced through a multi-channel global distribution ecosystem. That is a real competitive advantage for us. We have a global footprint, a comprehensive range of acquisition channels so that we can reach the right prospects at the right time with the right product, and importantly, at the right margins.
We've also got the data capabilities and the products and the channels to engage our 3.3 million existing customers at the right moment with personalized treatments. We're exporting this proven model and these capabilities to new countries. We use a broad set of channels to acquire new customers. These include digital channels, a large telesales platform, and a field sales force of close to 4,000 people. We tend to acquire our largest customers in the field, and our digital channels tend to bring in smaller customers at greater scale. We have now integrated these distribution channels to target the right products to the right customers across the SME segment around the world. Importantly, based on our customer's specific channel of choice. This dynamic approach is much more efficient. Digital has been the largest driver of this efficiency.
Looking at the global SME segment, which is three-quarters of our global billings, the digital channel delivered 39% of all new signings in 2017, and that's up from 32% the previous year. We're achieving these results while increasing investment efficiency by 20%. Bringing in new customers is, of course, where it all begins, but it's certainly not where it ends. We also have developed a set of treatments to grow our existing customer relationships. When a new customer comes into the franchise, we engage them on their benefits early. We engage them on their new product to capture more of their spending. As the relationship develops, our variety of channels give us opportunities to expand the relationship to upgrade and to cross-sell additional products. As I mentioned earlier, 71% of the millions of SME customers that we have just have one commercial product with us.
While this has been steadily growing, it still represents a significant opportunity for us. This slide just shows the combined impact of multi-channel acquisition and targeted customer expansion that we've just reviewed. In the U.S. SME segment in 2017, projected volume from new customer acquisition increased 11%. Growth from our existing customer expansions increased 16%. It's the combination of these two activities that are really driving the strong momentum that you see in our U.S. SME segment. We are now exporting this model to new countries. We have a big opportunity in the international SME segment to export this proven model, our proven acquisition and customer engagement capabilities. In our top eight international countries together, they account for 87% of our SME business outside the U.S., and in 2017, we achieved 17% billings growth across these countries.
Importantly, less than 5% of the total universe of small and mid-size businesses in these eight countries combined have a commercial relationship with us, which gives us a long runway for growth. Our plan is to scale in these markets by deploying the proven products and capabilities that we have deployed in the U.S. across these less penetrated countries. This strategy is already working with new products, digital capabilities, and customer engagement capabilities being deployed throughout 2017. You can already start to see the impact here in some of the markets where we've started to make these investments, like the U.K. growing at 47% and Canada growing at 16%. As we continue to strengthen our digital acquisition and customer engagement capabilities throughout 2018 and 2019, we believe we are well positioned to maintain very strong growth rates in these countries.
In summary, the commercial segment is an important growing part of American Express's overall business, and it represents a major growth opportunity for us going forward. Our strategy is working. We're the number 1 commercial card issuer globally. We're the number 1 issuer for small businesses in the U.S. We're the number 1 issuer for commercial products overall in the U.S., and we're the number 1 commercial issuer for Fortune Global 500 companies. We ended 2017 with double-digit growth and increased momentum. We have built a tremendous set of assets that give us a real clear competitive advantage, including our integrated payments platform, our industry-leading product set, our acquisition and customer engagement model, our large and diverse customer base, our global footprint, and of course, our world-class service and brand.
By continuing to focus on our segment-driven strategy, using our scale and our strong competitive advantages, we believe that we can continue the strong momentum and extend our leadership position in commercial payments. Thank you. Now it's my job to, I think, remind you that there's a 15-minute break, so you get a chance to stretch your legs now, and please come back in 15 minutes.
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Oh.
Yeah.
Man. Oh. Yeah.
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What would you do if you had even more time to explore? Book your next stay through the Fine Hotels + Resorts program and enjoy a world of benefits with the Platinum Card. Open up the world with Platinum, backed by the service and security of American Express.
The world is not flat. You can't just pinch it, swipe it, or scroll it. True, you've seen the Mediterranean, but have you?
How warm is Brazil in February? What color is dusk in San Francisco? There's a whole world out there, and no other card lets you experience it like a Platinum Card. Backed by the service and security of American Express.
Unpack the joy of travel with the Preferred Rewards Gold Card. Get off to a flying start with two airport lounge passes. Rest and relax with hotel room upgrades. With car rental upgrades, tour the local sights in style. Just some of the benefits packed into the Preferred Rewards Gold Card from American Express. Search Amex Gold.
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Time is a funny thing. Sometimes you're running against it. Sometimes you're looking for it. Sometimes you want time off to do nothing at all. There are things you want done on time, and things you do in a lifetime. Let us do the legwork and the hard work so you can find time for all the things you need time for. Personalized service with American Express.
[Foreign language] Vuoi una carta che non metta confini ai tuoi desideri? Con nuova Carta Oro American Express, il mondo ti dice sì. Trasformare le tue spese in viaggi e sconti sul tuo saldo carta? Sì. Avere in anteprima i biglietti del tuo artista preferito? Sì. Proteggerti davvero in caso di frode? Sì. Per te un bonus punti pari a EUR 100 di voucher sconto e il primo anno di quota gratuita. Richiedi subito nuova Carta Oro American Express su americanexpress.it.
That's the idea.
What do you think?
I don't like it.
Oh.
Yeah.
man.
Oh.
Yeah.
D-d-d-d-no.
Yeah.
In business, there are a lot of ways to say no.
Thank you so much.
Thank you.
We're doing it?
Yeah. Start saying yes to your company's best ideas. We help all types of businesses with money, tools, and know-how to get business done. American Express OPEN.
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There are a lot of ways to say no.
Oh.
Oh.
Yeah.
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Thank you.
We're a go?
Yeah.
We got a yes. What does that mean for purchasing? Purchase.
Let's do this.
Got it. Book the flight. Hi. B2B. Yeah.
Yeah. Yeah?
What's that mean for us? We can get stuff. What's that mean for shipping? Ship the goods. You're a go. Got the green light. That means go. All right.
Start saying yes to your company's best ideas.
We're going to hit our launch date. Thank you.
We help all types of businesses with money, tools, and know-how to get business done. American Express OPEN.
Oh, no.
Sometimes we have to pay for things we don't actually like. There is an upside to everything.
Bring me sunshine in your smile.
You could get 5% cash back on all purchases.
All the while.
Even the ones that didn't go to plan.
In the smile that brings a tear to my eye.
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Every day on every street in every town across America, small businesses show their love to you with some friendly advice, a genuine smile, and a warm welcome.
Ladies and gentlemen, our program is about to resume. Please return to the auditorium.
Day where you get to return that love because Shopping Small makes a big difference. On November 25th, get up, get out, and Shop Small.
Hey. I want to see you bounce to it. Let me see you bounce to it. I want to see you bounce to it. Let me see you bounce to it.
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Our plans for the future. I seemed to share a slide earlier.
The world is not flat. You can't just pinch it like that and [audio distortion] .
which is our integrated payments platform. You heard from Doug and from Paul about our businesses that serve consumers and serve our corporate card members. I'm going to highlight our merchants that sit on the other side of the platform, as well as the network infrastructure that powers the platform. I'm going to cover several areas with you today. We're significantly increasing merchant coverage globally to strengthen our integrated payments platform. We're investing in our network infrastructure to provide unique value to merchants, acquirers, proprietary issuers, and bank partners. I plan to showcase for you the power of our integrated payments platform. Given the level of interest, I will also provide some visibility into our discount rate. Let me begin with merchant coverage.
As you may recall, two years ago at this very forum, I shared an aspirational goal of getting to parity coverage with Visa and Mastercard in the U.S. in 2019. We also are focused on significantly increasing merchant coverage in countries internationally, and I'll give you an update on our progress there. Let's start with the U.S. This data is from the Nilson report, which is an industry-standard publication which estimates merchant acceptance using third-party sources. It shows the growth in merchant acceptance locations for American Express, for Visa, and for Mastercard from 2013 to 2017. We've adjusted Visa and Mastercard acceptance locations to exclude the roughly 600,000 ATMs and retail bank branches where customers can get cash advances.
With that adjustment, you'll see that American Express increased coverage in the U.S. from 6.4 million locations in 2013 to 9 million in 2017, and Visa and Mastercard grew from 8.8 million to 10.3 million in the same period. Our gap to parity, as estimated by Nilson, is in the neighborhood of about 1.3 million locations, which we believe is directionally correct. OptBlue continues to help us expand our merchant network in the U.S. As a reminder, OptBlue is a merchant acquiring program we announced in February of 2014. It allows third-party acquirers to contract directly with small merchants for American Express card acceptance. OptBlue helped us add more than 1.5 million places into our network last year, and these merchants are in a variety of industries. For example, over 100,000 restaurants started accepting American Express in the last year.
Over 60,000 salons and spas started accepting American Express last year, and over 100,000 construction suppliers now accept American Express. These include manufacturers and distributors of building materials like lumber, concrete, and electrical supplies. We have coverage information like this across industries and geographies that we've been using in our marketing to our card members to let them know of the many more places that they can use their card. While we're making good progress expanding coverage in the U.S., there are some industries that are proving more difficult, like government, healthcare, and utilities. Each of these have their own unique challenges. Some require complex technology changes for card acceptance, and others do not have clear decision-makers. As a result, we're working on targeted efforts to help us close the gaps in those industries. As you might imagine, the merchant arena is highly dynamic.
There's constant churn, with hundreds of thousands of merchants opening businesses each year and just as many closing their doors. We'll always have more merchants to sign, but we feel very good about our work as we continue to aspire towards parity coverage in 2019. Now let's go to merchant coverage outside the U.S. We've steadily increased merchant coverage internationally every year. Last year, we increased it 9% over 2016, and we're leveraging different acquiring partnerships to expand our merchant network, which in turn enables us to capture more business from our card members. Each construct is unique to the local acquiring landscape and regulatory framework. We launched OptBlue in Canada and in Mexico, and also in the U.S. territory of Puerto Rico. Aggregators are important partners for us. They're helping us increase acceptance among micro and small merchants globally.
These partners include Square and Stripe, Adyen in Europe, and BillDesk in India, just to name a few. We're also working with banks and acquiring partners to help us with coverage in key countries, and I'll tell you a little bit about that now. We have 120 issuing and acquiring partners. They're in approximately 130 countries and territories around the globe, and our bank partners have issued 48 million cards on our network. Historically, we've been focused on driving build business and cards in force from our bank issuing partnerships. We've begun to see build business slow to 5% last year, and cards in force down slightly in the same period due to regulation in Europe and in Australia. We've discontinued our licensing agreements with some partners in certain countries.
Despite regulation, bank issuing partnerships will continue to be an important growth opportunity, especially as we pursue high-growth markets such as China, Africa, and the Middle East. Going forward, we will leverage these relationships and put a greater focus on merchant acceptance. We want to move beyond focusing on just meeting the needs of the local card members in these countries. We want to partner with these banks to also significantly drive coverage in their respective countries. Doing this enables us to meet the spending needs of even more customers, including inbound premium travelers and global corporations. We also continue to sign big merchants that are well-known in their countries, some having thousands of locations. Here are some examples of major signings we had last year from around the world. We sign these merchants based on feedback we receive from customers in the local countries.
For instance, Indigo is a company in France that owns 300 parking lots and garages. This was a top merchant request from our corporate card members in France. Our CFE, which is Mexico's largest electric utility, it has more than 1,100 locations. This was signed based on feedback from consumer and small business card members in Mexico. Each of these signings improves our perception of coverage in the respective countries. They are also examples of how we leverage our integrated payments platform by addressing specific needs of card members to bring merchants on the network, which enables organic spend growth. Let me turn to merchant satisfaction, which remains a priority for us. As you may recall from last year, we conduct an annual survey of merchant satisfaction, which we send to merchants of all sizes, global, national, regional, and small merchants.
A key outcome from the survey is the Net Promoter Score, a well-known metric that tracks customer satisfaction and loyalty. We've continued to improve our merchants' Net Promoter Score each year from when we began tracking merchant satisfaction in 2012. In our most recent survey in 2017, we were up another eight points globally. There are many factors that drive merchant satisfaction. Our dedicated client managers are a key differentiator. Other networks and banks do not have the direct relationships with the breadth of merchants that we do. We use our data analytics and marketing expertise to promote merchants to our high-spending card members, enabling them to grow their business. Let me give you a brief example. Our recommendations platform allows us to make targeted and relevant merchant recommendations to individual card members based on the card member's location and spending.
For example, I live in South Orange, New Jersey. When I log on to the Amex app on my phone or log into amex.com on my desktop, I receive information about nearby merchants based on my personal spending history. I eat out a fair amount. I enjoy movies. I enjoy concerts. Here are some recommendations for merchants like The Village Trattoria and the South Orange Performing Arts Center. Over 15 million people received local merchant recommendations in the past year. Over the past few years, we've also rolled out new merchant-friendly policies around processes like disputes and chargebacks. These new policies align with the industry, making it easier for merchants to do business with us. Most recently, we announced this past December that we are eliminating the requirement for merchants to collect card member signatures for purchases at the point of sale globally.
This will help provide a faster and simpler checkout experience for both card members and merchants and helps reduce merchants' operating expenses associated with retaining signatures. The new policy takes effect next month in April. We are the only network to announce this policy globally. We've also made our speed of pay faster for our smallest merchants in many countries, most recently in Hong Kong and in Singapore. Speed of pay is the time it takes American Express to pay the merchant after they've submitted charges to us. Many people might believe that our merchant relationships are strained given the merchant litigation we face in the U.S. Payments regulation around the world. However, we remain steadfast in our commitment to improve our relationship with merchants in every country and with every merchant segment.
We recognize that if we continue to strengthen our relationships, more merchants will warmly accept American Express cards. Let's now move on to the network infrastructure and how we're investing in it for the future. At the core of our integrated payments platform is the vastly complex technical infrastructure that connects all of our key partners globally and enables the authorization, clearing, and settlement of their transactions. Global Consumer Services has issued more than 50 million cards on the network. Global Commercial Payments has more than 14 million cards on the network. The 120 active bank partners that I mentioned earlier have issued more than 48 million cards on the network. There are more than 18 million accepting merchants on the network, and we have hundreds of acquirers globally that connect merchants to our network.
The network infrastructure enables us to deliver products, capabilities, services, and security that our customers have come to expect from us. We have enhanced and evolved the network over the years. However, to better capitalize on an increasingly more dynamic and digital environment, we are investing in its technical infrastructure to further differentiate American Express going into the future. This is a complex undertaking that we expect to complete in two to three years. When we are finished, we will have state-of-the-art technology, advanced functionality, real-time modular infrastructure, and we will be fully data agnostic, so we can process a wide variety of data formats that come into the network from our partners. Investing in the network will enable American Express to deliver unique value to merchants, acquirers, proprietary issuers, and bank partners. We will deploy products, services, and capabilities with greater speed.
We will innovate more rapidly in new and emerging payment spaces, including mobile wallets and QR codes, and further support the digitization of the card member experience. Our infrastructure will have greater flexibility. We will be able to build once for many, meaning we will build a capability once and more easily deploy it to many countries at the same time. You heard Paul talk about the estimated $19 trillion opportunity in global commercial payments. We will further deploy our ability to support a wide array of B2B payments, including some that are not card-based. The network infrastructure is a tremendous asset, and investing in it will position us and the company to continue winning into the future. You've now heard about all the components of our integrated payments platform, card members, merchants, and the network infrastructure.
Let me showcase for you the power of the integrated payments platform. Let's talk about Hilton. Hilton is one of our most strategic partners. We have a very broad and deep relationship with them. Hilton is our first and longest co-brand partnership, beginning in 1995. Today, we have both consumer and small business Hilton co-brand cards. We've had a merchant relationship with Hilton since 1969. They accept our cards in 5,200 properties around the world. Hilton employees use American Express corporate cards. Our card members earn and redeem Membership Rewards points for Hilton stays, and Hilton sells American Express prepaid and gift cards at their hotels. Our travel and lifestyle services team members book stays for consumers of Hilton properties, and our global business travel joint venture books stays for corporate clients at Hilton hotels.
We manage our relationship with Hilton holistically, harnessing all of the assets across our diverse businesses to benefit both American Express and Hilton. We recently formed a new team called Strategic Partnerships to ensure that we have strong cross-enterprise collaboration that most effectively capitalizes on our integrated payments platform. This approach led to a broad, multifaceted, and multi-year agreement with Hilton that we announced last June. As part of it, we renewed and expanded our Hilton U.S. co-brand relationships. We are now the exclusive card issuer for Hilton consumer and small business credit cards in the U.S. We brought this same strategic and holistic approach to our relationship with Marriott. We announced a new multi-year agreement with them this past December.
As part of it, we will continue our existing U.S. Starwood Preferred Guest co-brand program and will be the provider for Marriott of super premium consumer and small business co-brand products in the U.S. going forward. Delta has been a merchant since 1964, and we've had a co-brand program with them for the past 22 years. As part of our efforts to expand our relationship, we partner with Delta to provide unique benefits to our card members and their customers. For example, our Platinum and Centurion card members have access to Delta Sky Club airport lounges. We also have several relationships with Facebook. They are a merchant, a corporate card customer. We are a large advertiser and sponsor on their platform. We're working across the company to bring together our data capabilities and marketing expertise with Facebook's platform to acquire and communicate with our customers in new and innovative ways.
For instance, we are providing card members with new servicing experiences through Facebook's Messenger bot. The approach we now have to working with our most strategic partners demonstrates the power of our integrated payments platform as we bring unique assets together across the company to unlock growth opportunities for American Express and for our partners. Let's now go to the discount rate. As a reminder, different factors may play a role positively or negatively impacting the discount rate. For example, we may have merchant-specific negotiations that result in a lower discount rate. There may be strategic growth initiatives such as OptBlue or our push towards parity in the U.S. Our mix of spending impacts the discount rate, sometimes positively, sometimes negatively, depending on the volume of spending we have in various industries and in geographic markets. I'll give you some visibility into our discount rate for 2018.
I provided you an outlook for 2018 at the last year's forum. At the time, I told you we expected the declines in the discount rate to return to the range of our historical guidance, which meant for the full year of 2018, we expected the blended discount rate to decline approximately 2-3 basis points. Given what we know now, we are updating that outlook and believe that the blended discount rate will decline 5-6 basis points for the full year. We have made specific and thoughtful decisions that are driving this decline. These decisions include negotiations with key strategic partners, which are already enabling revenue growth, our push towards parity in the U.S., and actions that are driving incremental B2B payments volume, which Paul mentioned earlier. These decisions have opened opportunities for greater merchant acceptance and more spending volume on the network.
We take a much broader view of the business than just the trend of the discount rate. When you look at the company's discount revenue growth over the last two years by quarter, we have averaged 5.3% growth and grew 7% in the most recent quarter. This reflects strong momentum across each of our businesses and our company combined. As Steve said earlier, we have a spend-centric model, and that spending can enable lending opportunities. If you then add the interest income from our lending activities, along with the fees generated from our cards, the company's revenue growth over the last two years averaged 6.5% growth and grew 9% in the last quarter. The reality of our business is that at times, the discount rate is a lever that we use to drive expanded coverage and to unlock profitable revenue growth.
With our global differentiated business model, we are very focused on driving profitable long-term revenue growth. We're confident the actions we're taking are the right ones to grow American Express, and we're comfortable with the revenue expectations we've provided for 2018, which Jeff will tell you about in just a moment. Just in summary, we're making strong progress. We're significantly increasing merchant coverage globally to strengthen our integrated payments platform, we're investing in our network infrastructure to provide unique value to merchants, acquirers, proprietary issuers, and bank partners, and we're capitalizing on the power of our integrated payments platform. Thank you. Now I'll turn it over to Jeff.
Thank you, Henri. I want to start by thanking everyone, including the people on the webcast, for listening, but I particularly want to thank those of you still sitting here with us in New York who are looking out the window, for those of you not here, at the wind and the snow whipping past the windows. Thank you for being here. My role is to try to take what you've heard over the last two hours or so and put it into a financial context. As I do that, I'll talk a little bit about 2018, and I'll talk a little bit about what we expect beyond 2018. Before I get to that, I actually want to start where Steve started.
I hope at this point of the afternoon that each of you, as you think about Steve's three takeaways, have your own view of the many different ways in which we see our business model as being very differentiated. As I think about the last two hours, I'm particularly struck by Doug's discussion about our innovative and differentiated value propositions on the consumer side that give us an unmatched ability to generate fee revenue. I'm struck by Paul's discussion of the way we use the integrated payments platform to drive B2B payment volume in a way that is very difficult for anybody else to match. Perhaps I'm most struck, Henri, by your example of Hilton and the full breadth of the relationship that we have with Hilton because of the many assets we have to bear.
We really believe in the differentiated business model and the way it positions us to win. Now, I hope that I don't have to convince anybody in this room that we're in a fabulous industry with a great runway for growth. I suspect that's why most of you cover the payments industry. I hope you see that as a management team, we are really focused on making the decisions and driving the execution that will deliver steady and consistent revenue and earnings per share growth. As we do that, it's based on the same simple financial model we've had for many, many years. We're in great growth businesses. We have a steady ability to get operating expense leverage, we have tremendous capital strength.
It's that simple financial model that historically, take away the last couple years of repositioning the company, have a remarkable track record of producing steady earnings per share growth in almost any economic environment other than the most extreme financial downturns, 9/11, the great financial crisis. It's that historical track record that we believe we're right back on track with. Our confidence in that is really heightened by the kind of momentum that we exited 2017 with, that Steve started the day by talking about, the momentum that we have as we enter 2018. That's the financial overview in many ways of the company story. Before I get to 2018, let me go to what I'm sure really brought those of you here in the auditorium with us downtown in the snowstorm to hear about, that's accounting and revenue recognition.
We all know that January 1, we, like all U.S. companies, have adopted a new revenue recognition standard. I would tell you, for us, that will produce no material change in our earnings, no material change in our revenue growth rates. It will, however, for us, drive some material changes to P&L geography. I think we are probably unusual in financial services for the changes you will see, so I wanted to talk about them for just a minute. What you see on the slide behind me, or for those of you looking at the webcast, are the 2017 numbers as we reported them a few weeks ago. There are really two changes that we're making that you will see beginning with the first quarter of 2018.
There are two kinds of items that we formally reported as a contra revenue that we're going to move down to expense lines. The first of those are our cashback rewards, which we formally reported as a contra revenue. Beginning in the first quarter, we will instead put them down into the card member rewards line, so you will have one line item with all of the reward costs that we incur as a company. The second change we will make is that there are certain kinds of payments to partners that we make that helps drive revenue that we historically treated as contra revenues. Beginning in the first quarter, we will instead move them down to an expense line that we will begin to call Marketing and Business Development. I'll go into a little bit more detail a little later about what's in that line.
When you put all that together, it simply adds to our revenues, and it adds to our expenses by the same amount. What it does do, I think, is give you a little bit greater disclosure, a little more transparency into some of the drivers of our business. In the next day or two, we will file an 8-K, and we will give you 2016 and 2017 by quarter, historically recast, using the new methodology so you have like-for-like comparisons you can make. Overall, I hope you will find this a helpful change with a little bit of enhanced disclosure, a little bit more transparency. That's enough on accounting. Why don't we talk about our view of 2018? Of course, it has to start with a view of what's the environment in which we find ourselves. Let's first talk about growth.
As you know, we don't try to make our own economic forecast. We really build our plans around the consensus. The consensus today for economic growth is a little bit of a mixed bag for us, actually. While growth in the U.S. is currently forecast to be up year-over-year, in some of our other key markets outside the U.S., growth is forecast to be a little bit weaker in the Eurozone, the U.K., Canada, Japan. Certainly, the U.S. is our biggest market, so stronger growth in the U.S. is certainly a good thing for us. Obviously, we'll have to see how the year plays out.
The Tax Act is a very good thing for the economy from our perspective, and there's a lot of other things going on in the political realm that we'll just kind of have to watch and see what the impact of them is. A stronger U.S. economy is good for us. For us, though, most of you know that there is a modest offset for us and that a stronger economy is generally accompanied by steadily rising rates. The latest consensus view of interest rates in the U.S. is for three or four, depending on which view you want to look at, three or four rate rises as we go through the year. As most of you know, we are a liability-sensitive company, and that stems from the spend and fee-centric nature of our business model.
It stems from the fact that our large charge card franchise gives us a large chunk of receivables that are not interest-bearing. As a result, as we think about how to fund the company, we try to fund the company in a way that keeps our exposure to rising rates in a very manageable range. Each year in our 10-K, we give you a disclosure where we say if overnight there are 100 basis point increase in rates over the ensuing 12 months, that would cost us about $167 million. Obviously, rates don't generally go up 100 basis points overnight, and obviously, generally, rates go up when the economy is strong, which is a good thing for us. You put all those things together, and that's why we see our exposure to rising rates as being very manageable. How do we manage it?
How do we get there? Let me remind you about our philosophy for funding the company. We believe we want to remain active in three different types of funding markets. We are active in deposits, we are active in the asset-backed security market, and we are active in the unsecured market. We think remaining active in all three markets is a good long-term strategy from a safety and soundness perspective. In a rising rate environment, though, the cheapest source of funding we have generally is the high-yield savings or online deposit program that we have that I know many of you tend to focus on. The amount of funding in that category has been around $30 billion for the last few years.
In 2018, I'd expect that number to begin to grow for the first time in a couple of years, and I'd expect it to grow for the next couple as well, facilitated by some changes we're making in the U.S., where we're consolidating our two U.S. banks into one bank. As it grows, I know many of you also spend a lot of time thinking about what's the beta on these kinds of accounts. As we previously disclosed, if you look at what's happened over the course of the five interest rate increases the Fed has so far done, the beta over that time period is about 0.4 on our online savings program. If you look at the chart, though, you do see that the beta of late has certainly gone up a little bit.
For our own planning purposes, as we think about managing our interest rate exposure to our target level going forward, we assume a beta on these accounts of about 0.7. That's interest rates. We have to make a couple other assumptions about the environment. Current consensus is that unemployment rates stay pretty steady with what they are. We assume foreign exchange rates essentially stay at current levels, beyond the things that Henri talked about in Australia and Europe that are impacting our GNS business, we don't assume any new or dramatic regulatory changes. Based on that context, back in January, we provided earnings per share guidance for the year of $6.90-$7.30. On that January earnings call, we took you through a range of other expectations that go along with that EPS guidance that are laid out on the slide here.
What I'd like to do is give you a little bit more context around each of these, starting with billings and loan growth. As you heard a lot about in the last couple of hours, we saw a really nice steady expansion as we went through 2017 in our billings momentum as we grew from 7%-9%. We fully expect that momentum to continue in 2018 with our confidence in that heightened by the breadth of where that strength was coming from. All of our geographies across the world, both the consumer and commercial side of the business, have shown steadily accelerating and now strong volume growth. The one exception in 2018 is the one Henri already mentioned, which is because of regulation in Australia and the European Union, we do expect the network volumes to be much more modest in terms of growth in 2018.
Turning to loans, 2017 was another in a string of years of us steadily growing faster than the industry while continuing to have best-in-class credit metrics. We expect that to continue in 2018, and we see a long runway for growth well beyond 2018. Our confidence here is, again, reinforced by the breadth. While the U.S. consumer business still provides the largest portion of our current loan book, interestingly enough, you actually see higher growth rates in 2017 on a percentage basis, albeit on a small base, in the international consumer and commercial segments. Which brings me to the third component of our revenues, fees, and other revenues. The largest single portion of this category is our card fee revenue.
I would say we are particularly pleased by the steady growth we've seen on card fees right in the face of the competitive environment we face everywhere in the world, but particularly in the U.S. consumer marketplace. I think it's a real testament to the differentiated value propositions we have in the marketplace because nobody else is able to generate the kind of fee revenue that we generate because of the value that consumers place on the products and the value propositions we have. All of those things together are what drove this steady acceleration in revenue growth that we experienced over the last couple of years of repositioning the company. That is what gives us confidence in our ability to sustain the momentum, heightened again by the breadth of where the revenue growth is coming from. Discount revenue, card fees, net interest income, all growing really nicely.
With our confidence further heightened by the fact that 80% of our revenues, if you look at Q4, came from the spend and fee aspects of our model. We put all that together, and our revenue expectation that we talked about in January is 7%-8% growth in 2018 is one we're very comfortable with. Let's talk about provision. The calculation of the provision for American Express is a very complex project. We operate in many different geographies around the globe. We have a commercial business and a consumer business. We have charge card products, and we have lending products. We have many different regulators who heavily oversee our provision process, in addition to your normal accounting oversight.
As I talk to many of the people in this room and on the webcast, I will make the observation that you all tend to look at and model provision in many different ways. In the face of all that complexity, and given all the focus these days on provision, we decided to try to make it really easy in 2018 and just give you the answer. Right. We expect provision to be up in 2018, about like it was up in 2017 on a percentage basis. That's mid-30% range. The drivers of that are exactly what the drivers were in 2017, which is we have really nice growth that we've had for years now in both charge and lending.
We have gone through a real big mix change where we have a lot less co-brand lending and more proprietary lending, and that comes with higher yields and a little higher write-off rates. Produces really good economics. That switch also leaves us with a good chunk of loans that are going through a seasoning process. I stood on this stage two years ago and pointed out that those were all the things we were going to do. Really two years on, it's all going exactly like we told you two years ago. This slide just shows you, remember, we do have a real mix of charge and lending. I would point out that our charge write-off rates didn't move at all in 2017. We view that as one just very interesting economic indicator about this status of our card member base.
Our lending write-off rates began to drift up in 2017. It was two years ago that I told you they'd start to drift up. They actually did not in 2016. They did start to drift up as we expected because of the mix changes and the seasoning in 2017, and I'd expect that to continue in 2018. It's doing so with really good margins. Right. Doug showed you a consumer-only version of this slide earlier. This is for the company overall. Looks at our net credit margin over a long period. You see really nice steady expansion as we have driven yields up while keeping best-in-class credit metrics.
In fact, if you step back and think overall about our ability to generate what I'll call customer margins, so revenue less rewards and write-offs, per dollar of assets we put on the books, I would suggest, once again, we have a highly differentiated business model versus the competition. How do we do that? How do we generate the revenue growth? We have to make very thoughtful and focused investments. Back in January, I talked a little bit about the fact that the very successful renewals of a couple of big co-brand agreements, which provide a great platform for longer-term growth, do represent about a $200 million headwind to 2018 earnings.
I also talked back on the January call about the fact that in light of all the aspects or impact of the Tax Act, we decided to add about $200 million more to our investments in 2018 than we had originally planned. To put those two numbers into context, though, those two $200 million numbers, I'd remind you that if you look at 2017, our overall customer engagement spending was almost $16 billion. I would point out the numbers I'm showing you on this slide are now recast for the new way that we will be reporting starting in Q1 with new RevRec. If you think about 2018, I'd make a couple observations. First of all, the smallest component of the things we do to create customer engagement is card member services.
I would expect that again in 2018 to be the highest percentage growth area. If you think about what you've heard over the last couple of hours, that shouldn't surprise you because that's where a lot of the things we do that we believe are particularly driving differentiated value for our card members sit. We think they're particularly difficult for others to replicate. When you look at rewards, now that we have fully lapped the rewards impact of the Platinum changes we made in the U.S. back in 2016 and 2017, I actually expect rewards in 2018 to begin once again to track much more consistently with the billings on the relevant products. That then brings us to the third line, marketing and business development.
Because this is the line where there are some changes because of RevRec, let me remind you a little bit what's in that. There's really two components to this line. The first is what I will call essentially the traditional or historical marketing and promotional line. There's some minor changes, but it's mostly that line. If you look at 2017, it's $3.4 billion. A little more than half that we spent acquiring new customers, about a quarter driving more engagement from existing customers with the remainder going to merchant and broader brand advertising. When you think about this line item in 2018 and beyond, I'd really point you back to the part of Doug's presentation where he talked about our relentless focus on driving more efficiency every year, particularly in our customer acquisition efforts.
As a result, I would expect growth in this part of the marketing and business development line to be pretty modest, because we think we can, every year, drive a little more growth with very few additional dollars. The other part of this line is the new part, where certain things that are payments to partners that we formerly treated as contra revenues, we are moving down into this line, marketing and business development. There's really three big components of this. The first would be incentives we pay mostly to larger corporate clients. The second would be payments we make to GNS partner banks, who when their cards that they issue are swiped at an Amex-managed merchant, we're in effect keeping a network-like fee and paying the rest of the merchant discount rate back to the GNS issuer.
The third component of this are certain payments we make to co-brand partners and a few other things. In 2018, the main change I'd expect to see here is because of the successful renegotiation of a couple of the large co-brand agreements that I referenced earlier, I would expect the co-brand payments part of this in 2018 to go up a little bit more significantly than the other components. Since we're talking about co-brands, I also wanted to update you on our view of where co-brands sit in our overall business mix. If you look at 2017, year-end, about 36% of our loan balances came from various co-brand partnerships, 16% of our billings. For those of you with a really good memory, you will remember that, boy, those numbers are down a lot from where they were a few years ago.
If you go back a couple of years ago, almost 50% of our loans at one point came from our co-brand partnerships and over 20% of our billings. We feel good about that mix change. If you look at who makes up those remaining co-brand partners, first and foremost, Delta is certainly, as they have been for years, our largest, most important, most intertwined, and most strategic partner. Henri talked you through how intertwined we are with Hilton. We could have done a similar slide for you with Delta that would have even had more interconnections. It's a great partnership with both of us working to drive business for each other. As we have in previous years, we've broken out what's now Marriott, formerly SPG.
For the first time, we've broken out Hilton and British Airways, because as they have continued to grow, they've both tripped over the 1% of our billings threshold. Beyond that, you have over 50 co-brand partnerships that we have around the world that account for the remainder of this balance. As you think about this portfolio, I would really emphasize the point that what's mostly left here are travel and entertainment-oriented co-brand relationships, where we have very multifaceted relationships that we think create great stickiness and great value for both partners. So that's investments. If you step back one more time and think about, well, what are really across the almost $16 billion that we spent in 2017, it'll be a little more in 2018. What are the things that perhaps are most important in driving growth in 2018 and beyond?
There's obviously lots and lots of things we do. Reflecting on the last couple of hours, I would particularly point you to the focus areas of in Doug's world, the premium customers and partnerships, our digital efforts and lending. In Paul's commercial world, I'd point you to the B2B payments work we're doing, the focus on small and mid-sized enterprises and business financing. Of course, in Henri's world, our continued efforts around the globe around merchant coverage and the network infrastructure. The last couple of things we have to do as we think about the guidance we've given you for 2018 is look at a tax rate. We continue to expect that our tax rate, given the new Tax Act, will be about 22%.
As we announced in January, because of the Tax Act charge we took in Q4, we are suspending our share buyback for the first half of 2018 with a resumption in the third quarter of 2018. I'm going to come back to capital and CCAR in just a minute. It's now March 7th. We have two months of volume data, one month of final financial data, and we're in the process of closing the books on February. I would say that we're off to a really good start in Q1. On the billings and loans side, the momentum with which we exited 2017 has continued.
While it's only March 7th and there's lots of uncertainty in the economic environment, I would suggest for the rest of the year, gosh, that bodes well in terms of what we've seen thus far in the U.S. economy in particular, but really around the globe. That kind of billings and loan momentum certainly bodes well for a continuation of the kind of revenue growth momentum that we exited Q4 with. Rewards, performing exactly as I would've expected, roughly in line with billings. Provision is on here because I just want to be clear, there's nothing that is surprising us about the provision. It's performing as we would've expected, as we've expected for a long time.
I would remind you that just due to the complexity of the accounting, there's a little quarterly volatility, but our view of the full year is exactly as we first began talking about last month. Overall, off to a good start in Q1, and that makes us very confident in the EPS guidance that we have provided for the full year. What happens beyond 2018? We have a simple financial model. Great growth businesses, steady operating expense leverage, capital strength, and that's what's produced the steady revenue and earnings per share growth that we're historically known for. I hope before we go to Q&A, that you have a clear view of the breadth of the very diverse revenue growth opportunities we have. I hope that nobody has any doubt about our ability to get steady operating expense leverage as we grow the company.
We have a long track record of doing this, we have a long runway to continue to do it. We have a long track record of being committed to deploying capital to generate value for shareholders. A few last comments here. First, no one should have any doubt about our commitment to using capital to generate value for shareholders. I would point out we are the only U.S. bank that has twice in the CCAR process used the mulligan process and had to be told by the Fed that we originally asked for too large a return of capital. We're committed to it. Second point I would make is the Tax Act is good for the company, it's good for the economy, and it will allow us to return more capital over the next few years to shareholders than we otherwise would have been.
It did drive a Q4 charge, our suspension of the share repurchase for the first half of 2018 will substantially rebuild our capital levels. We will go into CCAR 2018 with our capital levels substantially rebuilt. As you think about CCAR 2018, which we're right in the middle of, I would just make two observations. One is that the continued asset growth that we are doing as a company will require us each year to set aside some modest amount of capital to support that asset growth. The second reminder I would give you is the Fed every year evolves this process in ways that are sometimes not terribly transparent to us. It is transparent that this year they have made the severe scenario even more severe than it has been in previous years.
Just the end of last week, they put out some new guidance that we're all trying to understand about some changes in how they're going to model many things, including, in particular, credit card losses. We're working through all that, but no one should have any doubt about our commitment to using capital to generate value and about the impact of the Tax Act in the long term, which will be very positive. Let me conclude and then we'll go to Q&A. We have a highly differentiated model. We are in a fabulous industry with a long runway for growth, and we are very committed as a management team to making the choices and driving the execution that will return us to the kind of steady and consistent revenue and earnings growth that our shareholders have historically come to expect from us.
With that, I'm going to invite my colleagues back on the stage, and we're going to do some Q&A. Toby, we also have this year a new feature given the snowstorm of people with some ability to email in questions. We may have a few email questions in addition to the questions from folks live here in the room. Thank you.
Yeah.
Okay. Who would like to start? Steve, he's an emcee. Let's start right over here.
Oh, hi.
Don.
I guess on the merchant discount rate, I get it's down a little bit more because of some specific renegotiations, but that's always the case it seems like. That's part of the business. Can you give us a little more color on what might have driven that? Was it a big e-commerce player? Talk a little bit about that. Also, what does it mean going forward? Are we to expect sort of two to three basis points or is this the new two to three basis points?
Let me start and then I'll pass it over to Henri. I think as we look at the overall model that we have, the most important thing for us is to make sure that we have outlets for our card members to spend. That's the most important thing. Whatever we need to do to do that, we're going to do. Let me just put that in context for you. When you look at the three things that Anré put up, one is a commitment to parity coverage. We made the commitment to OptBlue, and as Anré went through, we talked about other industries, whether it was healthcare and government and utilities, which are a little harder to get into, but that gets to overall parity coverage.
B2B, when you look at it, you look at the data that Paul put up, we've got 3% growth T&E from a commercial perspective, 11% B2B growth. It's a very different dynamic, sort of B2B spending. Then there are specific deals that we will do from time to time to support the overall integrated model. As I look at it, I look at it from a perspective of we're growing discount rate revenue because we're getting more and more spend, because we're getting more and more locations, whether that be B2B locations or whether that be more parity coverage either in the U.S. or in international. When we have opportunities to do strategic deals with partners, we will do those strategic deals with partners. Is the five to six the new norm, or is it two to three?
That may go year-to-year, depending on the opportunities that present themselves.
Okay. Jeff, on credit. A lot of the card issuers, you're right in the middle of sort of your seasoning of replacing the Costco loans, or you're sort of entering it, depending on how you look at it. A lot of card issuers have sort of missed the mark and underestimated the trajectory of losses over the last year and a half, where they've had to just sort of raise their hand and say, "It's a little higher." What's your comfort level? Do you feel like you've built in enough cushion on your provision guidance? Can you talk a little bit about where charge-offs would head on a year-over-year basis in 2018?
Well, let me start, then Doug, you may want to add some color. We obviously are very confident in the guidance we've given you or the comment we've made or the expectations we've given you on provision, we wouldn't have done it. I tried, Don, to specifically point out that we first started telling you what was going to happen two years ago. We actually started out too conservative because it didn't happen as quickly as we thought it would. It's now happening exactly as we first started talking about two years ago. As we sit here today, think we are very comfortably tracking within the range of everything we would've expected, given the many different levers that are in fact being pulled across lots of different products and lots of different geographies. We feel good about what we said.
We feel even better about all of the economic trade-offs that we're making here.
Let me just add a couple things. First of all, we do all our underwriting through the cycle. We assume there's going to be a credit wave. Occasionally, we'll make slight adjustments in terms of how far off we think that credit wave is from today. I think one of the benefits we have, and we talk about it a lot because we really believe in it, is if you look at our loan growth, the math goes something like this. We have 11% growth in balances from existing members. We have, say, 7% growth from new customers we're acquiring. Then we lose about 5% through attrition, both voluntary and credit. That 11%, we feel we have a really tight confidence interval around, right?
If there's a portion of our growth that's more subject to those kind of errors you've seen other issuers make, it's going to be in that 7% that's new acquisition. Look, we're paying a lot of attention to performance there, and we're trying to stay out ahead of it, whether it's in the way we price and the way we offer interest-free periods and incentives to manage margin, or the way we adjust underwriting as we see stress start to emerge. You'll have heard other issuers say it, and it's true, that in certain near-prime segments and the very lower end of prime, as consumers have relevered, you've seen some default rates that have increased within FICO bands there, right? I think most issuers are trying to stay ahead of that.
Part of our benefit or advantage is we're less dependent on new customer acquisition, and we're less concentrated in those segments. We're vigilant about tracking it.
Steve Percoco, Lark Research. You guys have had a financial proposition, essentially as a growth stock for over 2 decades now. Low single digit, double digit earnings growth, stock buybacks, which fuel even higher EPS growth. You had that. It worked well during the go-go years. Obviously, with the Costco problem that you had, you backed away from it. You're going back to that now, essentially, stepping back a little bit in this first half. I just question, given the change in the environment. I understand what you're saying about the potential to penetrate more. Consumer growth is lower since then. I remember coming five years ago where the management prided itself in saying that they stayed away from loans. Now you're going all in on loans. I question whether you're really geared up for doing Working Capital Terms successfully. My question is why
Haven't you shifted to a different value proposition? Why don't you consider going with a higher dividend payout, a lower growth model? At this point in time, you're not getting the PE multiple today that you did back 10 or 15 years ago, which says to me that investors have doubts about your ability to sustain this model. Wouldn't going to a less aggressive financial model give you the ability to pull back on your lending, maybe take less risk, and actually get you a higher multiple in the end?
There's a lot there. Let me try and talk to you from a strategic perspective and from a customer perspective, which then flows into sort of a financial perspective. When you look at sort of what our customers need and what we're trying to do. Let's take the commercial business, because you brought up the commercial business as well as the consumer business. We'll start with the commercial business. When you look at our products, whether they be the charge card product or whether they be the credit card products that we offer, it's a form of working capital. It absolutely is a form of working capital. When you look at the charge card product and you look at the Plum Card product that we have, our charge card products probably get paid anywhere from 30 to 45 days. Plum Card gets paid to 60.
The move into working capital is a 90-day sort of payment. We look at it as a deferred payment. It's an extra 30 days. If you remember from the video, we launched it in 2016. We've been very prudent and very judicious and very circumspect about how we go about this. The reality is our customers want a wider variety of products and services, and we need to be able to, in a judicious way, be able to provide those products and services, whether they be cross-border payments, which they need, whether they be some working capital, or whether that be merchant financing. When you look at our penetration within SME, whether that's penetration in the U.S. or penetration international, we want to be able to offer them that suite of services.
What you also have to realize is that where we're looking at working capital is exactly to those customers that we already have. We're not using as a lead generation. What we're using as a lead generation is our existing card products, which we really know how to do well. As you have all that data, and as you manage those customers, you're able to understand just what they can and cannot do. That's the customer side of it, and I believe that's from a growth perspective. When you look at the consumer business, 59% of the loans that we generated in the fourth quarter were to existing customers. Organic growth almost 11%, as Doug just mentioned, to existing customers that we had. These are customers where we have 45% to 50% of their wallet, but half of their spending.
As we talked about early on about evolving consumer needs, there's not a lot of desire to go to multiple places to get necessarily financial services products. I don't want my customers going to my competitors to get loans when I already have half their spending as it is today. If you want to take that through from a financial perspective, it probably all plays out exactly as you said it would play out. The question is, would you keep the spending that you had? Would you then keep the lending that you had? Does your customer stay with you? Ultimately what we're about is meeting the customer needs and doing that in the most financially responsible way that we can. We've been very thoughtful about the strategy.
We've been very thoughtful about the coverage, which gets right back to the discount rate to invest in areas so that our customers can actually continue to spend. I don't see us moving away from that strategy because it really is driven from the top by what our customers really need and how we're going to serve our customers best.
I would just pile on really quickly and say it's something of a false choice to say you want to be in the payments business, certainly in U.S. consumer, but you don't want to be in the lending business. Our customers, their wallets account for about a third of all U.S. consumer credit card spend and about a third of all U.S. consumer credit card borrowing. They are borrowing roughly on par with the way they're spending. They're just not doing as much of it from us. Increasingly, we have a saying around here, which is, we're in the lending business because our customers are in the borrowing business on payment products, and we feel like we need to meet those needs, or we're inviting competitors into a place in their wallet where we don't want them.
We also say there's a competitive imperative, which is the intense competition around services and rewards make the lending revenues very important to funding a superior value proposition, our whole model is predicated on that.
The only financial comments I'd add are the spend and fee portions of our revenues are 80% of our revenues, but spend, fee, and lend are all inextricably intertwined to Doug and Steve's point. That model generated Q4 revenue growth of 9%, which I would suggest is a great number by the standards of almost any industry. We have a strong view in the growth prospects of this company. From a financial policy perspective
We pay a dividend today that is a 20%-25% payout ratio. Today, we are very comfortable with that payout ratio, you should expect us to stay in that range. The dividend will inch up a little bit as earnings go up. I wouldn't envision, given the way we view the growth prospects today, any significant deviation in that approach. We'll go right over here.
Thank you. Bill Carcache with Nomura. I had a follow-up question on the MDR. Can you talk a little bit about how much of a debate exists inside of American Express regarding how to manage the interplay between going after incremental billings and volume growth versus perhaps compromising a little bit more on the MDR? It seems that so long as your billings are growing at a faster rate than the rate of decline in your MDR, you're going to drive incremental revenue growth. To what extent, perhaps, has there been a change there? Maybe just a little bit of color on that.
That's a good question, Bill. I wouldn't say it's a debate. I would say a discussion. We always are discussing ways to grow the company profitably, that's what we're committed to. Sometimes that'll be through card fees, sometimes that'll be through lending, sometimes that's through something spending related, sometimes it's through a partnership, sometimes it's through greater coverage, sometimes it's driving B2B. Those are all examples that I gave, we do discuss it because we meet and we talk often as a leadership team about what's the best way to invest and grow the company. We don't, my team does not obsess over the discount rate trend alone. We focus a lot more on the discount revenue trend for the company and the revenue growth overall. That's what we focus on. We do talk about different ways in which we can grow the company.
As somebody that sits on the issuing side, I would say there's no debate whatsoever when that compression comes from us pursuing new segments that we previously didn't have access to, whether it's B2B, whether it's small merchant coverage, whether it's new industries that Anré's team is penetrating. I think it's obviously a little bit more painful when the compression is on business you believe that you already have. One of the challenges, we talk a lot about the lending adjunct to the consumer business. When you lose a dollar of billings, you don't just lose the $2.50 of discount revenue. You lose the financing opportunity against that, and it erodes the stickiness of the customer relationship overall. I would say, as a team, we've got past that sort of maniacal focus on that single metric of discount rate.
Follow-up. Can you guys talk a little bit about, I apologize, the EPS growth historically that you guys gave on average and over time guidance. There was a unique period during the post-Costco era where there were a lot of moving parts, and you gave a little bit more specific guidance. Now you kind of, Jeff, you showed the slide where you guys have all of the moving parts to the business model that generate EPS growth, but there was no specific guidance. Was that intentional, or is it still reasonable to believe that that kind of 10%+ is still possible?
I think that's intentional. Our view is we are very comfortable with delivering steady and consistent growth over time. We put a range out there. Our intention is to provide annual guidance moving forward based upon the economic and competitive environments. My objective is to manage this company for the medium to the long term, much like Ken did. To do that, you may make decisions in a given year that may not be consistent with your expectations are. I'd rather manage the expectations on an annual basis, on an ongoing basis like that. Go right back here. Right behind you, Jim.
Thanks. Mark DeVries from Barclays. Now that we've had a little bit more time to reflect on the implications of tax reform on your business, would be interested in hearing updated thoughts on what you think it could mean in terms of billings, demand for financing on the consumer side and for your credit as well.
I'll let Jeff and Doug.
Maybe I'll make the macro comment so that these guys chime in. Gosh, it's March 7th. I made the observation earlier that we're certainly off to a good start in terms of billings and loan volumes, though, as I've said for some time, when you look at the places or the parts of the company that are doing well, they're generally places where we can say, "There's something we did, and I see a strong result that directly stems from an action or a change in product or a policy that we made." Certainly, the economy is helping us. I just think it's a little early, Mark, to very definitively comment on just how much the Tax Act may be driving differential behavior. I'll let you guys comment.
I believe it is going to help, and it is helping somewhat right now. I believe that. I expect it will translate into greater consumer confidence and spend levels within our segment. That's where you would expect to see it translate. We're a spend to lend provider, you would expect that to flow through into loan growth at some proportion. I would expect that it would have
Some type of salutary effect on near-term delinquencies and write-offs. That's a supposition. That needs to play through the model. We haven't had time, as Jeff said, to see that yet.
One place I would add is that given that the Tax Act had a big benefit in the tax rate for many of the corporations that are U.S.-based, given that we serve more than half of the Fortune 500 and we're the number one corporate and small business issuer in the United States, we're watching to see if that spending does translate into more SME and more corporate spending, and we're watching it closely. It's early. It's only been a few weeks since the decision was made and announced.
Over here.
Thank you. Himangi Guha, Bank of America, asking on behalf of bondholders here, Jeff. Again, good to talk to you again from Paula Diot, my cousin there. When we look at the senior holdco issuance needs, basically I'm going to ask you across the cap structure. Senior holdco, your issuances have outpaced maturity, how do you see the needs this year? Sub-issuance, Tier 2 looks okay, but do you think it's opportunistic? AT1 110 basis points, Q4 2017. What are the thoughts around that? What's the optimal level there? Number four is redemptions. Do you see an opportunity to do liability management? Thank you.
Let me maybe stay fairly high level because I'll go back to the idea that when we look at our funding stack, we think it's really important to be active in all three of our main markets, the unsecured asset-backed and deposit growth market. If you think about the comments I made a few minutes ago, we are going to be growing for the first time in a number of years, the high yield savings program. That is a really good thing and attractive thing to do in a rising rate environment. What it does mean is that that's where you're going to see most of the growth for a little while, and yet we still want to be true to our desire to remain active in the other two markets.
Other than that shift to a little bit more in the high yield savings area, I wouldn't expect to see a lot of shift in the other two markets. To some extent, because we want to be active, because we want to keep our mix fairly similar, we're not going to make very timing-dependent decisions necessarily on mix because we're going to average in over time across all three of those markets. Over here.
Hi, thanks. It's Jamie from Susquehanna. Thanks for the incremental disclosures. Steve, in your prepared remarks, you said something, I'm paraphrasing, that you needed to prepare the network for new payment types, and you referenced the WeChat and the Alipay. Anré, you said something similar. You said something to the effect the future transactions may not be on card, I think was the language. What are you talking about there? Well, it's good that we said something similar. Which is a good thing. All that preparation worked. Let's talk about B2B for a minute. When you look at procurement spending and how that gets done today, you may not have the card economics that you have within that construct. You may not have incentive payments that get done. You may not have a discount rate. You may have a transaction fee.
You may be going from a bank account to a bank account. It may be a cross-border payment. I think when you think about our network, our network has been viewed as a network that is really card only. When you look at it can be geared to handle more types of payment transactions. That's what we will do because I think as more and more cash and check transactions become electronic, they're all not going to become card economic transactions. It doesn't mean you can't use that infrastructure because when you think about that infrastructure, it's a routing infrastructure, it's a distributed infrastructure that has various points around the globe, and you can use that to route different types of transactions. That's really what we're talking about.
If you look at what's happened, whether it's Zelle, whether it's Venmo, whether it's WeChat, person-to-person payments, things of that nature, I think, Doug made this point a minute ago, if you're in the payments business, you're obviously in the lending business, but you're also going to be, as payments continue to evolve, you're going to be in the transaction routing business as well. That's what we're doing. How that affects our overall economics, how that impacts our scale, we're not 100% sure, but I want to get ready now for that. I don't want to get ready when it happens. Just wanted to ask one follow-up. Doug, you had this slide 36. You don't have to look at it. You know what I'm talking about. It's the self-service slide.
Yep.
I was hoping, Jeff, you might be able to translate this into financials. It's showing a pretty significant trend that the customer is serving themselves. Presumably, they don't need an intermediary in that. How does that show up in the efficiency ratio?
Well, I would just go back to the general comment that maybe we didn't dwell on because we hope it's self-evident. We have a tremendous track record of seeing very little growth in the operating costs of the company as revenues grow. It's because we operate a scale business, because technology gets cheaper every year, and because every year our merchants and our card members want to interact with us more digitally, and we're getting more and more focused and better at enabling them to do so. It's really part of what has allowed us for a decade
To control costs, we see it as one of the key levers that for the next decade is going to allow us.
Yeah. For a number of years, when I would do these Investor Days in one of my old roles, we talked about how we created operating leverage from whether it's technology, whether it's customer service, whether it's credit administration, business services, and so forth. That hasn't changed. It's become a way that we do business. We're doing more and more transactions. Our cost to run those transactions are going down, and we're taking operating expenses that we had and investing those in other value-generating activities. Just for an example, last year, we used our customer service representatives to do more selling of existing products and services to existing customers on inbounds who are redirected from web. That's a big component of our strategy going forward.
It has been part of it at least for the last 10 years as once we globalized and consolidated and got scale out of our operating infrastructure.
Jamie, we had nine percentage points of shift from phone-based or intermediated servicing to self-serve over a 12-quarter period. That still left us with the majority of customers serving via phone. Right? We think if you look at our acquisition volumes and their propensity to self-serve, if you look at the fact that about 30% of our phone calls, the customer actually tried to self-serve before they called us. Either the functionality was not there, or they couldn't understand how to access it. You look at that factor, you look at chat, which was sort of a throwaway comment there, but both web chat as well as mobile chat, as we get better at engaging customers with that and using AI to resolve those chats with no human engagement, there's a lot of room to run there.
We'll go right here, then we'll come over here.
Hi. Thanks. Chris Brendler from Buckingham. I have two questions. I'm going to start with a follow-up on the Working Capital product, just a larger question around the commercial lending growth. I'm seeing $11 billion at year-end in that segment in terms of loans. I think most of that is card, correct me if I'm wrong, but if you could just talk about how long you've been testing Working Capital, what kind of loss rates you're expecting. This seems like a product that has, with a $750,000 potential line, is a little bit eye-popping. Just to get a little more comfort on what kind of loss rates you're targeting there and how comfortable you are that both that business, the merchant financing business, and all the other products you're layering on aren't growing too fast.
Yeah. I'd say that it's probably only about 15% of our overall. I'm just checking with Jeff, but I think it's about 15% of our overall of the loans. It is growing at a rate that is probably on par with our overall growth is. The loss ratios on that product would be probably slightly higher than a traditional charge loss ratio. Remember, if you think about a sort of credit card, it's probably a lot less from a working capital perspective because you're looking at a 90-day deferred payment here. You're not looking at something that's going beyond 90 days, whereas the credit card receivable goes out a lot longer.
Merchant financing has had even less growth than that as we continue to test that to make sure that we're offering not only the best experience, but we have the best credit experience as well because that one goes out a little bit further. However, having said that, we have the payables. Right? The merchant financing piece of that is a loan against sort of the merchant payables that they would have as well.
Just so I'm clear that these products have been tested for-
Yeah. Working capital was launched in December of 2016 and very slowly rolled out last year. Merchant financing's been around a lot longer. We paused on merchant financing as we rolled out more OptBlue because we had a little less transparency. That's why we paused on merchant financing for a bit.
Okay. That's helpful. Thank you. The second question is on the discount rate, and I understand there's a lot of different moving parts there. I guess the thing that I'm wondering is that change you made is a half a billion dollars roughly between 2 to 3 basis points up to 5 to 6. It takes about 200 basis points at your net discount to make that up. Can you give us any color on some of the growth benefits you're getting from some of the concessions and the OptBlue and just make us feel better that the net revenue is growing in the right way?
Well, you look at how the gross revenue is growing. Let's just talk about the gross revenue. You've got billings growth. We had great billings growth exiting Q4. When you look at the billings growth that we've had in SME, both internationally and in the U.S., where we've made B2B concessions where you have a lot of growth from a B2B perspective, we feel really good about that. We also feel really good about Having opened up more coverage gives us more share of wallet, which gives us more opportunity to grow lending. As Anré said before, when we look at this, we look at this end to end. Discount rate, for many, many years, was the proxy for margin for this company. There are so many other components that come into it.
What I wouldn't feel good about is if you weren't growing discount rate revenue. You're seeing good growth in discount rate revenue, and on top of that, lend revenue growth as well. We constantly revisit it, but we feel really good about the decisions that we're making, and we feel we're getting incremental share of wallet and incremental billings, which is driving incremental lending.
The other thing I would add, which I was trying to allude to in the presentation, is when we have Strategic Partnerships, we're looking across the whole enterprise and discount rate and that merchant contract is just one lever in a multifaceted relationship, if you take Hilton as an example. Right? We look at all of the levers together and say, in that relationship, what's the best thing to do for us and for them based on where our respective priorities are. Right? We are a large travel agency. We're trying to drive partnerships there that benefit Hilton. We have an MR relationship, Membership Rewards points. Just because a concession could be made in a discount rate doesn't mean we didn't get another benefit in another place that you just don't see. Even the OptBlue program, as we're expanding OptBlue, it does bring the rate down.
The part that we don't disclose as clearly for you is all the credit losses are now moved to the merchant acquirer. They manage the credit losses for all those millions of small merchants. All of the acquiring fees that we used to pay to the acquirers are now going away, that lowers our operating expenses and creates more leverage for us to invest in other areas. It's not just a one line. We look at the interplay across everything to see how it's helping the company grow, we believe the fourth quarter could be a good view of how we believe we can operate going forward.
The root of my question is that this program, OptBlue, is a success, is what you're saying.
Yeah.
We're very happy.
Q4 had the same kind of discount rate reduction year-over-year that Anré just talked about in 2018 had the highest revenue growth rates we've had in the company in years.
Thanks much.
Come right over here. See if we can get that mic.
I'm going to do some text questions. We'll do Ken.
Hey, guys. It's Jimmy Hanna. In terms of the deposit base, what % would you characterize as more of a small business or a commercial-oriented customer versus a consumer customer?
You're talking about the online deposit program?
Yep.
It's 100% consumer.
The question is that an opportunity for you? As I look at commercial banks, one thing they talk about with their commercial customers is that many times businesses leave two times the amount of their lending relationship in deposit, and it's very sticky and low priced, and it's because the bank does a lot of cash management and other opportunities. Is that ever something that because you have people on the street working on commercial customers, 40% of your customers are commercial, is that an opportunity out there as a funding source eventually?
I think it's an opportunity as a funding source in the short to mid-term. It's something that we've actually discussed. As we're going through consolidating our banks right now, we've had two banks. As we consolidate our banks, we've had a lot of success from a consumer perspective. As we've managed from a trigger perspective, as Paul showed you, how we manage from a client management perspective, it's another product that we can bring to bear. We think there's opportunities from a small business perspective to absolutely drive the deposit.
One quick follow-up. Just slide 26 talked about the four strategic imperatives. I'm just curious, you guys have been acquisitive over the years, but kind of smaller add-on acquisitions here and there. Steve, as you take over now for Ken's legacy, should we have in our mindset that there could be bigger potential acquisitions out there for American Express?
Well, here's how I think about it. These are the four priorities, we need to move these forward. The way we're going to move these forward is organically partnership and acquisition. If the right acquisition, the right opportunity comes along, we'll do it. We can do that either if it's an expansion of the organic product base, if you will. It's an expansion of the product set. Or much like we just did with Mezi and Cake. It's about capabilities to really get to playing a more essential role of the digital lives of our customers. I'm not going to take anything off the table, but I think it'll all be in the strategic context of those four priorities and how we're going to grow going forward.
Thanks.
Ken?
Thanks. Ken Bruce, Bank of America, Merrill Lynch. I'll try to be quick because it looks like it's getting worse outside, more so than better.
We have cots and blankets.
I like you guys. I guess my first is a comment, really. The 59% loan growth contribution from existing or seasoned accounts I think is a great statistic. It really speaks to a lot of different things. I think just from the standpoint of credit, it's important. If you can continue to provide that information on some regular basis, that would be great. My question relates really to one of Doug's slides. He shows the new accounts acquired having gone from 17% in 2015 to about 5% in 2017. I assume some of that is probably just the deceleration from the Costco buildup that you got or post-Costco buildup that was occurring at that time.
I'm really kind of interested in terms of maybe if you could dimensionalize what that slowdown is and if you could provide maybe some context for where you would expect new account acquisitions to be going forward.
Yeah. I don't think Costco really had a lot to do with it. It has to do with how we move money around to optimize our investments. We track every acquisition product channel market at a very granular level. As we see returns start to change and start to improve in certain segments, we're going to move it. I do think that outside the U.S., we tend to have a more fee-based model, and those often translate to slightly higher acquisition costs, but also higher spend, higher revenue margin customers over time. We've been really successful outside the U.S. over the last couple of years and have moved money there.
It's really just an ongoing optimization, and if I had a choice between driving most of my growth from new customers or driving it from average spend of those new customers, I'd opt for the latter because it spins our model. It is that high spend, high margin, insistent customer base that's really at the heart of our proposition.
Okay. Then, Anré, just a quick question if I can be. You kind of discussed within the context of OptBlue getting to parity in the U.S. and obviously extending that globally. At least in the U.S., are the payment acquirers, are they rolling in American Express pretty much all the time as they are renewing their relationships with merchants?
Yes, that's what's happening. We have all the merchant acquirers, major acquirers in the United States that are part of the OptBlue program. There are no real outliers, and they do offer American Express in an integrated way with their offering, and we track the close rates and the percentage of merchants they speak to that close, and we're very pleased with the progress thus far that the program has been adopted in the way that we envisioned when we rolled out the concept in February of 2014.
Okay. You want to go for an email question?
Sure. Okay. There's two questions so far that have come in through the email channel. First one, Jeff, for you from John Hecht at Jefferies. Is there any change in the seasonal elements of revenue and expenses given the accounting change to do with revenue recognition?
No.
Okay, good. Very efficient. Steve, this one for you from Sanjay Sakhrani at KBW. I'm curious on how you believe you'll be different in leading AXP than Ken was, and maybe can you talk about some of the changes you've made or are planning to make as you take over?
Yeah. Let me talk a little bit about how we're the same, we'll get a little bit into sort of the difference. I think both of us have a tremendous affiliation and appreciation for this company and for the culture of this company, for the brand, and to our commitment to our customers. That certainly is the same, we're both pretty much lifers, right? I think that when we look at sort of this transition, which was by my account, and I think by most people's account, a pretty seamless transition. We're not pivoting here. This is not a pivot. We are doubling down on what really has worked in the past with probably a little bit more of a laser focus on a few things at this particular point in time.
What I think is a little bit different is, it's probably very similar to when Ken first took over 17 years ago. I'm a little bit closer. I'm a little bit closer to how the company sort of operates. When Ken took over, he took over much more of a holding company. We still had the American Express Bank. We still had Ameriprise and so forth. What I think that we're trying to do, and this is really a continuation of what Ken had started over the last year, is really to look at things from an enterprise perspective. To really look at where the advantages are. You've seen some of that today. You've seen that a little bit with a little bit more focus on a differentiated business model.
You see that with the question that was asked to Anré, is there debate around sort of the merchant discount rate? We're really looking at this thing, I think, a lot more end to end. I think that from a change perspective, I've been around a really long time, I've been involved with Ken for just about every single one of these reorgs in the last sort of 10 years or so. As we looked at this particular reorganization, it was really to get us even more focused than we were, more centers of excellence, put things together and eliminate some of the spans and layers that we had. The changes that we made, I took over on February 1st. We made our organizational changes on February 1st, we are ready to roll.
Doug not only has the global consumer business as he has, but he now has responsibility for credit, responsibility for digital, and responsibility for our analytics as well. Doug has really two roles here, running a business and running centers of excellence that support the company. That's been a journey we're on. Henri picked up additional responsibility for GNS because I think as we move forward here, you're going to see GNS become so much more important from an acquiring perspective, and you're going to see the issuing component of that really being used in a very much more tactical way to drive more relevance in certain markets and in certain geographies. Strategic Partnerships with Henri also picked up, and you saw a great example of that with Hilton and could have done that with Delta or Marriott and so forth.
That Henri picked up a little bit later in the year. From a commercial perspective, I'm in the process of looking for somebody to head the commercial business for us overall. Paul's doing a great job stepping in at this point. Did a great job, I think, presenting our commercial business today. That's pretty much what we talked about because the commercial business was a combination of sort of the open business from years ago, small business internationally, cross-border payments, and the traditional corporate card business. We put all that together. Then you saw from a leadership team perspective, we've moved a few people around. Paul Fabara took over all of our servicing and credit administration. I did not replace the vice chairman role. I think those would be the highlights from an organizational perspective.
What I could tell you is this is a management team, as you saw, that's sort of a little bit 50-50. 50% from the outside and 50% sort of organically grown within these walls here. We are all committed, and we are all determined to continue with the momentum that we have. A little bit longer answer than Jeff's answer of no.
I've got one more that has come in from Macrae Sykes at Gabelli. The question is just whether we can comment on the recent litigation and appeal case, the timeline for announcements, and potential impact.
Let me just make a couple of comments. Number one, from a timeline perspective, we think it'd probably be in the June timeline. Number two, what I would say is we believe in consumer choice, this is why this is important for us. Number three, we also believe that from a merchant perspective, if you decide to sign a contract with us, you're not forced to sign a contract with us to have acceptance, you should live by the terms and agreements of the terms and conditions of that particular contract. While we don't necessarily believe in the short term anything sort of truly detrimental will happen to our business, we've had these contractual terms and conditions for decades. We believe in them, that's what we're fighting for.
If it's these terms or it's some other terms, we're standing our ground because we believe these are the right terms and conditions to do business with us. We don't believe our customers should be disparaged or harassed at the point of sale. That's the answer. Anything in the room? Yes.
This is Ashish Sabadra from Deutsche Bank. Jeff, you mentioned the rewards will grow more in line with billing. One of the concerns is the competitive intensity is going to pick up, particularly as banks start reinvesting some of the tax savings back in the growth initiatives. Just in that light, if the competitive intensity does pick up, what are your expectations for rewards, and could that change over a period of time? Thanks.
Maybe I'll make a quick comment, then Doug, you may want to add. Look, I think we're very clear on what we expect for 2018. Sitting here this afternoon, we feel really good about the value propositions we have in the marketplace and their competitiveness. We're focused on using all of the levers we have, including our tax savings, to drive steady growth for our shareholders going forward. We'll have to see what competitors do, but we feel good today.
Yeah. I would only say our customer base is some of the most sophisticated consumers in the world, right? You can't play them for fools. They need real value, both on the more commodity levers of price and rewards, as well as on the experience side. We like what we've done in terms of that kind of more commodity, those levers. What we've done in investment, you can see it in the Platinum product, right? We put 5X rewards on air. We drove a substantial increase in engagement with air, but also with the non-air category of roughly the same amount.
We'll continue to make those smart investments, but we're committed to rebalancing the way we build value propositions and serve our customers and focus more on differentiated experience and service-based value, whether it's our lounge collection, whether it's Pay It Plan It, whether it's investment in servicing and our mobile product. We're going to continue to make sure that we're pushing that envelope. We think it's a place, number one, where our customers expect us to innovate and a place where we're uniquely credible laying claim to competitive advantage.
That sounds good. Maybe just one quick follow-up question. Doug, on slide 62, you talked about how in 2017 compared to 2007, you have customers which have much better credit quality, much more tenure, and much lower balance transfer. Overall, the quality of the portfolio is much better. In addition, can you also talk about how the new technologies like AI, ML, there's been a lot of talk about how that helps you on the underwriting side upfront, but also can it help mitigate the risk on the backside?
Like when a risk profile of the customer increases, is there a predictive capability there, and is it possible for you to because the fact that you do approvals at the transaction level, is there anything that you can do there or turn down an active card and just prevent the kind of spike in charge-off we saw in the last cycle?
It's been a very big driver of our performance over the last several years. I think we're still in the relatively early innings of our ability to use increased storage processing and ML technologies to improve our discrimination. No question about it. I'll give you one example. One example is, historically, because of processing throughput and such, with the complexity of the algorithms we run, we would have to do a stratified sample where we'd bring in about 2% of all transactions on which to model fraud propensity. It would take us about two or three days to run that algorithm. Now we run it on the full sample, and we run it in a fraction of the time. We'll continue to be able to benefit from these, both in origination phase as well as the ongoing management.
Not just in bringing in traditional data, but in using natural language processing to crawl the web and make other inferences about existing customers' creditworthiness.
Front here.
Evan Kurzban. My question's about the global consumer. You talk about your customer being sort of more sophisticated. I think there's a perception that overseas the American Express card isn't taken widely. Although older customers might have multiple cards and that's not a problem, with maybe some newer customers, I think that that could be an issue when they might only have one or two cards and they want a card that can be taken widely. I was just wondering kind of if that perception's true, it's not taken overseas, or why that might be the case and what barriers there are to that happening.
Well, our coverage, Anré can speak to it, is certainly less robust in certain international markets. There are international markets like Brazil and Japan where we have excellent coverage, U.S. level of coverage or better. In terms of how much of a barrier it is for us retaining customers or acquiring new ones, we've enjoyed tremendous acquisition efficiency over the last couple of years outside the U.S., both in traditional kind of search and display media channels, but also in terms of that member get member or referral program I was talking about. Which for me is both a high-efficiency source of growth, but it also speaks to the conviction that our customers have and their willingness to recommend everything about the product, the services, the rewards, and the coverage to family members and friends.
It's actually driving a much larger portion of our acquisition growth outside the U.S. compared to inside the U.S. I'll say one other thing, too, which is you could make the assumption, hey, it was okay. You got a lot of customers. You acquired them 10, 15 years ago. They're hanging on because they're habituated to the coverage that we have, and they've learned to live with it. The fact of the matter is, new customer acquisition is driving nearly twice as much growth outside the U.S. as it is inside the U.S., and a larger portion of new customers outside the U.S. are under the age of 35.
We think from a relevance point of view, outside the U.S., while there is work to do on coverage, there's no question about it has not been a significant inhibitor to our ability to grow and take share and remain relevant to the newest generation of consumers.
Just before Anré answers on sort of on coverage, two other statistics that were in the presentation. You have 17% SME international billings growth, and you have 14% international consumer growth. That's the billings growth in the market. We're not talking about people coming out of the U.S. We're talking about that billings growth. Those are the two highest growth areas that we have at this particular point in time. That says that the coverage that we have is working from an acquisition perspective in those markets. We know there's more we can do, but that also means there's more upside that we have.
Yeah. That's where I was going. You should see the coverage expansion that we're aggressively moving on half of the last several years as a growth opportunity for the company. When we acquire merchants, we're doing so at the request and in partnership with either our bank partners, our corporate clients, or the consumer. For example, if we go into Germany and we sign Aldi, which is one of the largest supermarket chains there, Aldi South and North, it creates a complete reappraisal of what American Express stands for in the market.
Now the largest supermarket chain in the entire country, with thousands of locations, now accepts American Express and is proactively promoting it, which we think is good. When we sign Lidl in the U.K., which is a discount grocer, people think of American Express as high-end. They say, well, now there's a different store that has locations, and we offer that to customers. It creates not just more spending from existing customers, but it makes more people willing to recommend the card with the member get member that Doug referred to, and it also makes younger customers who maybe thought of American Express differently reappraise the brand and more likely to come on board. These things are working together, not in isolation.
Great. Thank you.
More.
Okay.
From Craig Maurer at Autonomous. For Jeff, how should we think about modeling the provision in 2019 and beyond? Thank you, Craig. It doesn't seem that Amex would need to exceed an allowance of 3% of loans by any meaningful degree, considering where peers are at.
Gosh, if Craig was here, I'd say, Craig, you know I'm not really going to answer that question. Look, we feel really good about the growth we've had over the last number of years in our lending. We've done it while retaining best-in-class credit metrics. The write-off rates have begun to drift up, as we told you they would two years ago. Exactly what happens in 2019 is gonna be a function of exactly how we're performing in terms of growth across all the many different opportunities we have. I think the one thing, and Doug, then I'll let you add, that I would say is we feel very confident about the economics we will generate in 2019. What the mix is of growth rates and provision growth rates is gonna be a function of where we choose to grow, at what rate.
Yeah, look, the majority of the increase in write-off rates or delinquencies are things that we are doing very deliberately. Growing more rapidly, which has a seasoning impact, and growing from within our existing customer base. That reduces volatility, but it doesn't mean that it won't cause write-off rates to drift up because you focus that credit extension on people that use credit, on revolvers within the base, and on average, they have, while very attractive, slightly higher write-off rates. The vast majority of what we're seeing is what we're doing to ourself here, and it's a very deliberate strategy and one that, I don't know what slide number it is, but we're getting paid for, whether it's in yield or whether it's in that net revenue margin, which I would invite you to compare to our competitors.
I think you'll see a lot of competitors quite proud of net revenue margins in the 10.5% range, say, compared to the 15% range. The wild card is what happens macroeconomically, right? That's something no one's got an inside view on, and all we can really do is deal with segments which we think will have lower volatility, make sure we're getting paid for the risk we take, and remain really vigilant about changes or stress emerging in some of those segments.
Okay. We are at the hour. We hope today that you got a little bit better perspective of the differentiated business model, the amount of growth opportunities that we do have in this very attractive payments industry, and the fact of where we are gonna focus our attention on the four strategic priorities. We hope you were able to take away a little bit more than you had when you came in. We thank all of you who came today in this absolutely terrible conditions outside.